SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 and 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported) February 10, 1999
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TECHSCIENCE INDUSTRIES, INC.
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(Exact name of Registrant as specified in Charter)
Delaware 2-68701 22-2298015
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
3 Rockaway Place, Parsippany, New Jersey 07054
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(Address of principal executive office) (ZipCode)
Registrant's telephone number, including area code: (973) 263-8951
Not Applicable
--------------
(Former name and former address, as changed since last report)
The Exhibit Index required by Item 601 of Regulations S-K appears on Page 2 of
this Report.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On February 10, 1999, the Registrant entered into a written letter of intent
(the "LOI")with PetPlanet.com, Inc., a non-affiliated California corporation
("PPI"). The LOI contemplated a reverse merger business combination wherein the
Registrant will acquire all of the outstanding common stock and/or options and
warrants of PPI solely in exchange for an aggregate of 7,325,000 authorized but
unissued shares of the Registrant's Common Stock, $.01 par value per share(the
"Reorganization Shares"), after which there will be 9,575,000 shares of the
Registrant's Common Stock issued and outstanding (the "Reorganization"), giving
PRO FORMA effect to the Reorganization. The Reorganization Shares will be issued
to PPI's shareholders, option and warrant holders on a pro rata basis at which
time PPI will become a wholly owned subsidiary of the Registrant.
The LOI provided that as a condition to the closing of the Reorganization, the
Registrant shall close a private placement of 250,000 shares of its Common Stock
for gross proceeds of at least $1,000,000 (the "Financing"). The Financing shall
be made by the Registrant solely to accredited investors pursuant to Rule 506 of
Regulation D under the Securities Act of 1933, as amended (the "1933 Act"). The
proceeds of the Financing shall be placed into escrow and released to the
Registrant upon the closing of the Reorganization.
The LOI also provided that as additional conditions to the closing of the
Reorganization:
(i) the execution and delivery of a definitive Agreement and Plan
of Reorganization (the "Definitive Agreement") between PPI, PPI's shareholders
and the Registrant containing the basic terms and conditions set forth herein
together with the customary representations, warranties and covenants;
(ii) mutual due diligence reviews;
(iii) mutual approvals of the shareholders and Board of Directors of
PPI and the Registrant;
(iv) the production of audited financial statements by PPI and the
Registrant;
(v) the Registrant being current in its reporting obligation
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended;
(vi) the Registrant having a positive tangible net worth of at
least $975,000;
(vii) the Registrant having a capitalization consisting of: (a)
20,000,000 shares of authorized common stock, $.01 par value per share,
of which not more than 2,250,000 shares shall be issued and outstanding
immediately prior to the Reorganization held by a minimum of 500
shareholders, giving PRO FORMA effect to the Financing; and
(b)1,000,000 shares of authorized "blank check" preferred stock, $.01
par value per share, of which, no shares shall be issued and
outstanding immediately before the Reorganization; and
(viii) the resignation of all of the Registrant's officer and
directors at the closing.
On February 5, 1999, and pursuant to the terms and conditions of five identical
Accredited Investor Subscription Agreements with non-affiliated investors, the
Registrant consummated a private placement under Rule 506 of Regulation D under
the 33 Act (the
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"Seed Money Private Offering"). The Seed Money Offering, which provided the
necessary funding to implement the Reorganization, was comprised $24,800
principal amount of 30 day convertible promissory notes bearing interest at 9.6%
per annum (the "Notes"). The Notes are convertible into an aggregate of 400,000
authorized but unissued shares of the Registrant's common stock, $.01 par value
per share at $.062 per share which are ineligible for public sale for a period
of 30 months from the date of issuance.
Thereafter on February 25, 1999, and pursuant to a Certificate of Restoration
and Revival duly filed with the Delaware Secretary of State, the Registrant
reinstated its Certificate of Incorporation in Delaware.
On February 19, 1999, and pursuant to the terms and conditions of two identical
Accredited Investor Subscription Agreements with non-affiliated investors, the
Registrant consummated a private placement under Rule 506 of Regulation D under
the 33 Act (the "Bridge Private Offering"). The Bridge Private Offering, which
provided the funding for the Registrant's bridge loan with PPI, was comprised of
$150,000 principal amount of 10% promissory notes (the "Notes") and 100,000
unregistered shares of the Registrant's Common Stock, $.01 par value per share
(the "Bridge Shares"). The Notes are due and payable on and the Bridge Shares
are issuable at the closing date of the Reorganization with PPI (the "Closing").
On February 26, 1999, all of the Registrant's directors and the holders of
approximately 67% of the issued and outstanding shares of the Registrant's
common stock, $.01 par value per share, consented in writing to the adoption of
a number of actions designed to implement the Reorganization (the AMajority
Consent"). The Consent, which was adopted pursuant to the permissive provisions
of Section 228(a) and 228(c) of the General Corporation Law of the State of
Delaware (the "Delaware Sections"), was comprised of the authorization and/or
approval of the following actions:
(i) the Reorganization;
(ii) an amendment to the Registrant's Certificate of Incorporation
to effectuate: (a) an increase in the number of authorized shares of common
stock, $.01 par value per share to 20,000,000; (b) a four for twenty-five
reverse split of all issued and outstanding shares (the "Reverse Split"); (c)
the creation of an authorized class of 2,000,000 "blank check" shares of
Preferred Stock, $.01 par value per share; and (d) a change of the name of the
Registrant to PetPlanet.com, Inc.;
(iii) a private placement under Rule 506 of Regulation D under the
Securities Act of 1933, as amended (the "Act") of an aggregate of 400,000 post
Reverse Split Shares at $.062 per Share, which Shares shall be restricted for 30
months(the "Seed Money Private Offering");
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(iv) a private placement under Rule 506 of Regulation D under the
Act of an aggregate of 250,000 restricted and post Reverse Split shares of
common stock at $4.00 per share; and
(v) an amendment to the Registrant's 1984 Incentive Stock Option
Plan creating the 1999 Long Term Incentive Plan wherein an aggregate of
2,000,000 Post Reverse Split Shares are reserved for issuance of grants
thereunder.
On March 4, 1999, and pursuant to the terms and conditions of a written Bridge
Loan Agreement with PPI (the "Bridge Agreement"), the Registrant advanced the
sum of $150,000 to PPI in order to fund PPI's operations in anticipation of the
closing of the Reorganization (the "Bridge Loan"). The Bridge Loan was evidenced
by a 10% secured, convertible promissory note due at the closing of the
Reorganization (the "Bridge Note"). The Bridge Agreement provided that in the
event the Reorganization does not close on or before May 15, 1999, the term of
the Bridge Agreement shall be automatically extended to the earlier of the
closing date of the first equity or debt financing consummated by PPI or October
1, 1999. The Bridge Note was secured by a continuing first lien and security
interest in and to: (i) such number of authorized but unissued shares of PPI's
common stock, no par value per share, as shall, when added to the number of
issued and outstanding shares, shall equal fifty one (51%) percent of PPI's
total issued and outstanding common stock capitalization; (ii) the right and
title to PPI's PetPlanet.com domain name, website, website software and any and
all copyrights, trademarks, servicemarks owned by PPI or acquired by PPI after
the date of the Bridge Agreement; and (iii) any and all inventory, accounts
receivable or other tangible or intangible assets acquired by PPI after the date
of the Bridge Agreement.
On March 12, 1999, the Registrant, fulfilling its obligations under the Delaware
Sections, caused Notice of Consent to Action by Majority Shareholders
(comprising the Majority Consent) together with a President's letter to
Shareholders (the "Statutory Notice") to be mailed to the Registrant's
shareholders and all broker dealers holding shares for the benefit of the
Registrant's shareholders. The Statutory Notice was accompanied by a Notice of
the Reverse Split, a transmittal form, a substitute Form W-9 and instructions
for the transmittal form.
On March 18, 1999, the Registrant filed a Certificate of Amendment to its
Certificate of Incorporation to be filed with the secretary of State of the
State of Delaware implementing the Reverse Split.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits and Index Required
Exhibit Index pursuant to Item 601(a) of Regulation S-K
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NUMBER EXHIBIT
10 (c) Letter of intent dated February 10, 1999
10 (d) 506 Accredited investor Subscription Agreement
10 (e) Accredited investor Bridge Loan Subscription Agreement
10 (f) Certificate of Restoration and Revival
10 (g) 506 Accredited investor Subscription Agreement
10 (h) Majority Consent
10 (i) Bridge loan Agreement
10 (j) Statutory Notice
10 (k) Certificate of Amendment to Certificate of Incorporation
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be filed on its behalf by the
undersigned thereunto duly authorized.
Dated: Parsippany, New Jersey
May 13, 1999
TECHSCIENCE INDUSTRIES, INC.
BY:/s/ JAMES T. WOLL
-------------------------------------
James T. Woll, President and Chief
Executive Officer
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EXHIBIT 10(c) LETTER OF INTENT DATED FEBRUARY 10, 1999
PETPLANET.COM, INC
438 Boynton Avenue, Suite 100
Berkeley, CA 94707 USA
PHONE 510.558.1237 FAX 510.558.1238
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February 10, 1999
Techscience Industries, Inc.
3 Rockaway Place
Parsippany, NJ 07054
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ATTN:GARY W. GILL, TREASURER
RE: POTENTIAL REORGANIZATION TRANSACTION INVOLVING PETPLANET.COM,
INC AND TECHSCIENCE INDUSTRIES, INC.
Gentlemen:
This letter sets forth our intentions with respect to the
principal terms and conditions of the proposed reorganization transaction (the
"Reorganization") involving PetPlanet.com, Inc., a California corporation
("PetPlanet") and Techscience Industries, Inc., a Delaware corporation ("TSI").
The basic terms and conditions of the Reorganization are as follows:
1. TRANSACTION TERMS. On the terms and subject to the conditions
to be set forth in the Definitive Agreement as defined in Section 2 hereof, TSI
will acquire all of the outstanding common stock and/or options and warrants of
PetPlanet solely in exchange for 7,325,000 newly issued shares of TSI's Common
Stock (the "TSI Stock") after which there will be 9,575,000 shares of TSI Common
Stock issued and outstanding, giving PRO FORMA effect to the Financing, as
defined below. The TSI Stock will be issued to PetPlanet's shareholders, option
and warrant holders on a pro rata basis at which time PetPlanet will become a
wholly owned subsidiary of TSI. As a condition to the Closing (defined in
Section 3 hereof), TSI shall close a private placement of 250,000 shares of TSI
Common Stock for gross proceeds of at least $1.0 million (the "Financing"). The
Financing shall be made by TSI solely to accredited investors pursuant to Rule
506 of Regulation D under the Securities Act of 1933, as amended (the "1933
Act"). The proceeds of the Financing shall be placed into escrow and released to
TSI upon the Closing of the Reorganization.
2. DEFINITIVE AGREEMENT. The Reorganization is subject to and
conditioned upon the negotiation, execution and delivery of a definitive
reorganization agreement (the "Definitive Agreement") between PetPlanet,
shareholders of PetPlanet ("PetPlanet Shareholders") and TSI containing the
basic terms and conditions set forth herein together with such other
representations, warranties, covenants, terms, indemnities, and conditions as
would be usual and customary for a transaction of this nature and which are
mutually agreeable to the parties, including, without limitation, the making of
all necessary filings and the obtaining of all necessary approvals or consents
from third parties required to consummate the proposed transaction. The
execution and delivery of the Definitive Agreement by PetPlanet shall be subject
to the approval of the PetPlanet's Board of Directors. In addition, the parties'
obligations to proceed with Closing of the Definitive Agreement shall be subject
to the satisfaction of the conditions in Section 11 hereof.
3. CLOSING DATE. The closing of the Reorganization (the
"Closing") will occur within three business days after the satisfaction of all
conditions to closing stated in the Definitive Agreement; provided, however,
that either PetPlanet or TSI (if such party is not then in breach under the
Definitive Agreement) could terminate the Definitive Agreement
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if the Closing has not occurred as of April 1, 1999. The date on which the
Closing occurs is referred to in this letter as the "Closing Date."
4. BEST EFFORTS. TSI and PetPlanet shall negotiate in good faith
and use their best efforts to arrive at a mutually acceptable Definitive
Agreement for approval, execution and delivery at the earliest reasonably
practical date. TSI and PetPlanet will thereupon use their best efforts to
effect the Closing and to proceed with the transactions contemplated by the
Definitive Agreement as promptly as is reasonably practicable.
5. TERMINATION. This letter may be terminated by PetPlanet if the
Definitive Agreement has not been negotiated, executed and delivered on or
before March 1, 1999 or if TSI has not adequately responded to PetPlanet's
request for due diligence materials. Once executed, the Definitive Agreement
shall supersede this letter of intent in its entirety.
6. ACCESS TO RECORDS. For so long as negotiations with respect to
the proposed Reorganization are pending and have not been terminated by either
party, each party shall have access to the other party's books and records for
purposes of evaluating the other party's assets, liabilities, financial
condition and prospects and the validity of the representations and warranties
made by the other party and their respective shareholders in the Definitive
Agreement.
7. CONFIDENTIALITY. TSI and its shareholders, on the one hand,
and PetPlanet and its shareholders, on the other hand, will keep confidential
all information and materials regarding the other party reasonably designated by
such party as confidential. The provisions of this Section 7 shall not apply to
any information which is or shall become part of the public domain through no
fault of the party subject to the obligation from a third party with a right to
disclose such information free of obligation of confidentiality. TSI and
PetPlanet agree that no public disclosure will be made by either party of the
existence of this Letter of Intent or any of its terms without first advising
the other party and obtaining its consent to the proposed disclosure, unless
such disclosure is required by law, regulation or stock exchange rule.
8. STANDSTILL AGREEMENT. For the greater of sixty (60) days from
the date hereof or so long as this letter remains in effect as provided in
Section 5 above, neither PetPlanet nor PetPlanet's shareholders will (i) solicit
or encourage any offer or enter into any agreement for the sale, transfer or
other disposition of any capital stock or assets of PetPlanet to or with any
other entity or person, other than sales of goods and services by PetPlanet in
the ordinary course of its business, (ii) entertain or pursue any unsolicited
offer for any such sale, transfer or other disposition, or (iii) furnish to any
person or entity (other than TSI, and its authorized agents and representatives)
any nonpublic information concerning PetPlanet or its business, financial
affairs or prospects for the purpose or with the intent of permitting such
person or entity to evaluate a possible acquisition of any capital stock or
assets of PetPlanet.
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For the greater of sixty (60) days from the date hereof or so long as
this letter remains in effect as provided in Section 5 above, neither TSI nor
TSI's shareholders will (i) make or encourage any offer or enter into any
understanding or agreement for the purchase, merger or other acquisition of any
capital stock or assets of an operating company (other than PetPlanet); (ii)
entertain or pursue any unsolicited offer for any such transaction; or (iii)
furnish to any person or entity (other than PetPlanet, and its authorized agents
and representatives) any nonpublic information concerning TSI or its business,
financial affairs or prospects for the purpose or with the intent of permitting
such person or entity to evaluate a possible transaction of the type that TSI is
contemplating pursuant to this letter of intent.
9. EXPENSES. Except as otherwise set forth herein, each party
shall bear their own expenses incident to the transactions contemplated herein
up until and including the Closing of the Definitive Agreement. Once the
Definitive Agreement has closed, all subsequently incurred transaction costs
will be borne by the surviving entity.
10. LETTER OF INTENT. It is understood that this letter is not an
offer or a contract but is only a letter of intent, notwithstanding anything
contained herein or otherwise to the contrary, and no binding commitment of any
nature whatsoever shall be implied by virtue hereof, except for the provisions
set forth in Sections 2 through 9 hereof. Except as stated in the immediately
preceding sentence, (i) no binding agreement shall exist unless and until the
Definitive Agreement has been executed and delivered by the parties, and the
only as and to the extent stated therein, and (ii) the termination of this
letter and the negotiations for the proposed transaction prior to the execution
and delivery of the Definitive Agreement for whatever reason shall not result in
any obligation or liability of any party to the other.
11. CONDITIONS. The Closing of the Reorganization will be subject
to the following conditions:
A. CONDITIONS TO BE SATISFIED IN ORDER FOR PETPLANET TO PROCEED:
1. Complete and satisfactory due diligence review of TSI
by PetPlanet.
2. Approval of the shareholders and Board of Directors
of TSI.
3. TSI shall have delivered by March 1, 1999 audited
financial statements and notes thereto covering the two years
ended October 31, 1998, including income statements, balance
sheets and statements of cash flow and stockholders equity
(the "TSI Financial Statements"), such statements to include
an audit report issued by Wiss & Co., LLP or such other
recognized auditing and accounting firm that shall be deemed
acceptable to PetPlanet.
4. There shall have been no material adverse changes in
TSI, financial or otherwise, from the information provided in
the TSI Financial Statements.
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5. Prior to the Closing, TSI shall have prepared and
filed with the Securities and Exchange Commission, all reports
and filings required to be filed by a company having a
reporting obligation pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")
and such reports and filings shall be true and accurate and
prepared in material compliance with the applicable disclosure
provisions of the 1934 Act covering the periods included in
the TSI Financial Statements.
6. Immediately prior to the Closing of the
Reorganization, TSI shall have a positive tangible net worth
of at least $975,000, as determined in accordance with
generally accepted accounting principles, giving PRO FORMA
effect to the Financing.
7. The capitalization of TSI shall consist of (i) 20
million shares of authorized common stock, $.01 par value per
share, of which not more than 2,250,000 shares shall be issued
and outstanding immediately prior to the Reorganization,
giving PRO FORMA effect to the Financing; and (ii) 1 million
shares of authorized "blank check" preferred stock, $.01 par
value per share, of which, no shares shall be issued and
outstanding immediately before the Reorganization. There shall
be at least 500 record holders of common stock of TSI.
8. There shall be no TSI Common Stock Equivalents
outstanding immediately before the Reorganization. For
purposes of the foregoing, "TSI Common Stock Equivalents"
shall mean any subscriptions, warrants, options or other
rights or commitments of any character to subscribe for or
purchase from the TSI, or obligating TSI to issue, any shares
of any class of the capital stock of TSI or any securities
convertible into or exchangeable for such shares.
9. The resignation of the officers and directors of TSI
effective upon the Reorganization, with such vacancies filled
by the nominees of PetPlanet.
10. Although TSI shall be the surviving corporation in
the Reorganization from a corporate law perspective, the
Reorganization shall be accounted for as a "reverse
acquisition" for accounting and financial statement purposes,
wherein PetPlanet shall be deemed the surviving entity for
such purposes.
11. Any necessary third-party consents shall be obtained
prior to Closing, including but not limited to consents
necessary from TSI's lenders, creditors, vendors, lessors.
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B. CONDITIONS TO BE SATISFIED IN ORDER FOR TSI TO PROCEED:
1. Complete and satisfactory due diligence review of
PetPlanet by TSI.
2. Approval of the shareholders and Board of Directors
of PetPlanet.
3. Any necessary third-party consents shall be obtained
prior to Closing, including but not limited to consents
necessary from PetPlanet's lenders, creditors, vendors,
lessors.
4. PetPlanet and Steven E. Marder shall have entered
into an Employment Agreement on mutually acceptable terms.
C. COVENANTS APPLICABLE FOLLOWING THE REORGANIZATION:
1. Following the Reorganization and for a six month
period thereafter the following actions of PetPlanet shall
require approval of the board of directors including the
written concurrence of Raymond Skiptunis:
(a) issuance of any shares of common stock except in
connection with an acquisition acceptable to the Board
("Authorized Acquisition");
(b) issuance of any additional classes of equity
securities or securities convertible into equity securities;
(c) issuance of any new options, warrants or rights
to acquire common stock of TSI (collectively the
"Derivatives"), other than pursuant to TSI's 1984 Incentive
Stock Option Plan and TSI's 1999 Long Term Incentive Plan; the
exercise prices of any such new Derivatives so issued during
the period shall not be less than $4.00 if the same shall
occur prior to the commencement of trading in the common stock
of TSI. Once trading in the common stock of TSI shall have
commenced, the exercise price of Derivatives issued thereafter
shall not be less than the fair market value of TSI's common
stock as determined by the mean between the bid and asked
closing prices thereof. In addition, no Derivatives newly
issued hereunder shall be exercisable for a period of one year
following the Closing;
(d) make any acquisition of assets or stock of
another corporation or otherwise consummate any business
combination, except as previously described in PetPlanet's
business plan;
(e) incur any material amount of indebtedness except
in the ordinary course of business or in connection with an
Authorized Acquisition;
(f) declare or pay any dividends;
(g) pay any pension or severance pay to an executive
officer;
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(h) repay any loans made to PetPlanet by members of
management or their affiliates;
(i) enter into any employment or other compensation
arrangement other than with Mr. Marder providing for
annualized cash compensation exceeding $110,000; or
(j) renew, extend or modify any employment agreement
or enter into any new employment agreement with Mr. Marder
except on terms reasonably acceptable to the Board.
If this letter accurately sets forth your understand of the proposed
transaction with respect to the matters discussed above, please so indicate by
executing a copy of this letter below and returning the executed copy to the
undersigned not later than February 15, 1999. If we have not received an
executed counterpart of this letter of intent on or before February 15, 1999,
this letter of intent shall terminate automatically and be of no further force
and effect.
PETPLANET.COM, INC
BY: /s/ STEVEN E. MARDER
------------------------------------
Steven E. Marder, CEO
ACCEPTED AND AGREED to this
10th day of February, 1999
TECHSCIENCE INDUSTRIES, INC.
BY: /s/ GARY W. GILL
----------------
Gary W. Gill
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EXHIBIT 10(D) 506 SUBSCRIPTION AGREEMENT
TECHSCENCE INDUSTRIES, INC
ACCREDITED INVESTOR SUBSCRIPTION AGREEMENT (the "Agreement") dated
February 8, 1999 between Techscience Industries, Inc., a Delaware corporation
with principal offices at 3 Rockaway Place, Parsippany, New Jersey 07054 (the
"Company") and the person or persons executing this Agreement on the last page
(the "Subscriber").
1. DESCRIPTION OF THE OFFERING. This Agreement sets forth the terms
under which the Subscriber will invest in the Company. This subscription is one
of two subscriptions for $12,400 principal amount of 30 day convertible
promissory notes bearing interest at
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9.6% per annum (the "Notes"). The Notes, a form of which are annexed to this
Agreement as Exhibit "A" and hereby incorporated herein by reference, are
convertible into an aggregate of 200,000 authorized but unissued shares of the
Company's common stock, $.01 par value per share at $.062 per share (the
"Shares"). The Shares will be "restricted securities" as that term is defined
under Rule 144 under the Securities Act of 1933, as amended (the "Act") and
ineligible for public sale for a period of 12 months from the date of issuance.
In addition, each Subscriber hereby agrees and consents to an additional 18
month voluntary lock up of the Shares so that the Shares will be ineligible for
public sale for a period of 30 months from the date of issuance. The Notes are
being offered under and pursuant to Rule 506 of Regulation D (the "Rule") under
the Act for a period of five business days from February 8, 1999. This offering
is being conducted solely to "Accredited Investors" as that term is defined in
Rule 501(a) of Regulation D under the Act for the purpose of securing the 'seed
money' necessary to put the Company in the position to implement the Company's
proposed business combination with PetPlanet.com, Inc., a non-affiliated
California corporation ("PPI") wherein the Company will acquire all of the
issued and outstanding shares of PPI's common stock, $.01 par value per share,
solely in exchange for the issuance of an aggregate of 7,325,000 shares of the
Company (the "Reorganization").
2. TERMS OF THE OFFERING. The Company is offering the Notes on a
strictly best efforts basis with no minimum principal amount of Notes that must
be purchased. As provided in the escrow agreement annexed to this Agreement as
Exhibit "B" and hereby incorporated herein by reference (the "Escrow
Agreement"), the Shares issuable upon the Subscriber's conversion of the Notes
shall be held in escrow by Lester Yudenfriend, Esq., securities counsel to the
Company until the closing of the Reorganization. In the event the Reorganization
does not close on or before April 1, 1999, and unless extended by the written
agreement of the Company and PPI, the Company will: (i) repay the Subscriber the
full amount of his investment in the Notes upon the Subscriber's tender of his
original executed Note to the Company; and (ii) restore the Shares to authorized
but unissued status. The Execution of this Agreement shall constitute an offer
by the Subscriber to subscribe to the Shares in the amount and on the terms
specified herein. The Company reserves the right, in its sole discretion, to
reject in whole or in part, any subscription offer. If the Subscriber's offer is
accepted, the Company will execute a copy of this Agreement and return it to
Subscriber along with a duly executed Note. Upon execution of this Agreement,
the Company will instruct its transfer agent to cause the original issuance of
certificates representing the Shares and the delivery thereof to Lester
Yudenfriend, Esq., the Escrowee under the Escrow Agreement.
3. SUBSCRIPTION PAYMENT. Subscription to each Note requires a minimum
total cash investment of $12,400. The Company has agreed, however, to accept
subscriptions for $4,133.33 and $6,200 principal amount of Notes so long as the
total number of Subscribers does not exceed five. The subscription price will be
payable in cash in full on subscription.
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4. IMMEDIATE USE OF SUBSCRIPTIONS BY THE COMPANY. The Company is
conducting the offering on a strictly best efforts basis without a minimum.
Accordingly, all funds forwarded directly to the Company by Subscribers upon the
execution of this Agreement will immediately be deposited in an operating
account maintained by the Company at First Union National Bank and thereafter
utilized for the purpose of : (i) bringing the Company current in its periodic
reporting obligations under the Securities Exchange Act of 1934 (the "34 Act");
(ii) settling outstanding obligations to creditors; (iii) reinstating its
charter in the State of Delaware; (iv) paying legal and accounting fees; (v)
registering the Company's common stock with Standard & Poors Corporate records;
and (vi) defraying the costs of the Reorganization.
5. THE COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company hereby
represents and warrants as follows:
(a) The Company will be, prior to the closing of the
Reorganization, a corporation duly formed and in good standing under the laws of
the State of Delaware with full power and authority to conduct its business as
contemplated;
(b) The Company has the corporate power to execute, deliver
and perform this Agreement, the Notes and the Escrow Agreement in the time and
manner contemplated; and
(c) The Shares issuable to Subscribers upon their conversion
of the Notes have been reserved for issuance and when issued, will be duly and
validly issued, fully paid and non-assessable with no personal liability
attaching to the ownership thereof.
6. SUBSCRIBER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. The
Subscriber hereby represents, warrants and covenants as follows:
(a) The Subscriber is an "Accredited Investor" as defined in
Rule 501(a) of Regulation D under the Act. This representation is based on the
fact that the Subscriber is an accredited individual who, together with the
Subscriber's spouse, have a net worth of at least $1,000,000 OR the Subscriber,
individually, has had net income of not less than $200,000 during the last two
years, and reasonably anticipates that the Subscriber will have an income of at
least $200,000 during the present year and the next year;
(b) If the Subscriber is a corporation, it either has assets
of $5,000,000 or is comprised of stockholders that are individually accredited
and: (i) the person executing this Subscription Agreement does so with full
right, power and authority to make this investment; (ii) that such entity was
not formed for the specific purpose of making an investment in the Company; and
(iii) that all further representations and warranties made herein are true and
correct with respect to such corporation;
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(c) The address set forth below is the Subscriber's true and
correct residence, and the Subscriber has no present intention of becoming a
resident of any state or jurisdiction;
(d) The Subscriber has received and read or reviewed, is
familiar with and fully understands the due diligence material furnished by the
Company, annexed to this Agreement and comprising, inter alia: (i) draft copies
of the Company's Form 10-KSB Annual Reports, Form 8-K Current report and Form 10
SB; (ii) audited financial statements for the five fiscal years ended October
31, 1995; (iii) draft audited financial statements for the six fiscal years
ended October 31, 1996; (iv) the Company's February 199 Letter of Intent with
PPI; and (v) a copy of PPI's Business Plan including three year cash flow
projections and assumptions. The Subscriber also fully understands this
Agreement and the risks associated with this offering, and confirms that all
documents, records and books pertaining to the Subscriber's investment in the
Notes and requested by the Subscriber have been made available or delivered to
the Subscriber by the Company;
(e) The Subscriber hereby specifically acknowledges and
accepts that the Subscriber is fully aware of the following HIGH RISK FACTORS:
(i) The Company is a "shell corporation" with no
operations since 1991;
(ii) The Company has been disenfranchised by the
State of Delaware for non-payment of franchise taxes. Although the Company is in
the process of reinstating its charter and reinstatement will be retroactive, as
of the date hereof the Company has not yet effectuated this reinstatement;
(iii) The Shares will not be deemed duly and validly
issued until and unless the Company is reinstated in the State of Delaware and
as a result the Subscriber's 144 holding period will not commence until such
date;
(iv) The Company is presently delinquent in its
reporting obligations under the 34 Act and has been so delinquent since 1991;
(v) Unless the Company becomes current under the
34 Act, the Subscriber will not be able to take advantage of Rule 144 under the
Act, as a means of selling the Shares;
(vi) Even if the Company is successful in becoming
current in its reporting obligations under the 34 Act, the Subscriber will be
unable to take advantage of Rule 144 under the Act, as a means of selling the
Shares until and unless the Subscriber has held the Shares for 30 months;
(vii) There is currently no market for the Company's
common stock and there can be absolutely no assurance whatsoever that a market
will ever develop. In addition, no market will develop until and unless the
Company is successful in reinstating
16
<PAGE>
its charter, bringing its 34 Act reports current and consummating the
Reorganization with PPI, of which there can be absolutely no assurance
whatsoever;
(viii) There can be no assurance whatsoever that PPI
will be successful without the infusion of additional capital usually attendant
upon an Internet company;
(ix) Although the Company intends to consummate the
Reorganization with PPI as soon as practicable, the can be absolutely no
assurance whatsoever as to the timing of the Reorganization. Accordingly, and
until the Reorganization is consummated, the Subscriber will own shares in a
"shell" with no operations, no material amount of assets and no prospect for
recoupment of the Subscriber's investment until and unless the Reorganization or
another similar transaction closes. In the event the Company is unsuccessful in
consummating the Reorganization, the Subscribers' investment in the Notes may
never be recouped;
(ix) For all of the reasons set forth above, the
Subscriber should be prepared to lose his entire investment in the Notes.
(f) The Subscriber has had an opportunity to ask questions of
and receive answers from the Company or a person or persons acting on its
behalf, concerning the terms and conditions of this investment and confirms that
all documents, records and books pertaining to the investment in the Notes and
requested by the Subscriber has been made available or delivered to the
Subscriber;
(g) In the event the Subscriber exercises the conversion
privileges of the Notes, he will be acquiring the Shares solely for the
Subscriber's own account, for investment and are not with a view to or for the
resale, distribution, subdivision or fractionalization thereof; and the
Subscriber has no present plans to enter into any such contract, undertaking,
agreement or arrangement;
(h) The funds tendered to the Company in payment of the Notes
subscribed for hereby belong to the Subscriber, and no other individual or
entity has any interest in such funds. Furthermore, and regardless of the nature
of such funds (i.e., whether in cash, personal, cashiers, bank or certified
check) the same represent legal income of the Subscriber;
(i) The Subscriber understands that the Shares issuable upon
conversion of the Notes have not and will not be registered under the Act, and
must be held for a minimum of 30 months prior to any public sale thereof;
(j) The Subscriber understands that the Company is under no
obligation to register the Shares issuable upon conversion of the Notes under
the Act or to comply with the requirements for any exemption which might
otherwise be available, or to supply the Subscriber with any information
necessary to enable the Subscriber to make routine sales
17
<PAGE>
of the Shares issuable upon conversion of the Notes under Rule 144 or any other
rule of the Rules and Regulations of the Securities and Exchange Commission
adopted under the Act;
(k) The Subscriber's compliance with the terms and conditions
of this Agreement will not conflict with any instrument or agreement pertaining
to the Notes or the Shares or the transactions contemplated herein; and will not
conflict in, result in a breach of, or constitute a default under any instrument
to which the Subscriber is a party or the Notes or the Shares is the subject;
(l) The Subscriber will seek his own legal and tax advice
concerning tax implications attendant upon the purchase of the Notes and
understands and accepts that the Company is relying upon this representation
insofar as disclosure of tax matters is concerned;
(m) The Subscriber hereby acknowledges and represents that the
Subscriber is aware of the following:
(i) The Notes are speculative investments which
involve a high degree of risk; and
(iii) The closing of the Reorganization is
specifically conditioned upon the Company satisfying all of the conditions
precedent set forth in the Letter of Intent with PPI. One of those conditions
precedent is the successful consummation by the Company of a second private
placement of 250,000 shares of its common stock at $4.00 per share under Rule
506. There can be absolutely no assurance whatsoever that this financing can or
will be successfully consummated by the Company. The risk of failure of this
financing will fall predominately on the purchaser of the Notes offered hereby.
The foregoing representations and warranties are true and accurate as
of the date hereof and shall be true and accurate as of the date of delivery of
the subscription to the Company and shall survive such delivery. If, in any
respect, such representations and warranties shall not be true and accurate, the
Subscriber shall give written notice of such fact to the Company, specifying
which representations and warranties are not true and accurate and the reasons
therefor.
7. RESPONSIBILITY. The Company or its officers and directors shall not
be liable, responsible or accountable in damages or otherwise to Subscriber for
any act or omission performed or omitted by them in good faith and in a manner
reasonably believed by them to be within the scope of the authority granted to
them by this Agreement and in the best interests of the Company provided they
were not guilty of gross negligence, willful or wanton misconduct, fraud, bad
faith or any other breach of fiduciary duty with respect to such acts or
omissions.
18
<PAGE>
8. MISCELLANEOUS.
(a) This Agreement shall be deemed to have been made in and
shall be governed by and interpreted under and construed in all respects in
accordance with the laws of the State of New Jersey, irrespective of the place
of domicile or residence of any party. In the event of a controversy arising out
of the interpretation, construction, performance or breach of this Agreement,
the Company and the Subscriber hereby agree and consent to the jurisdiction and
venue of the Superior Court of the State of New Jersey, Morris County and/or the
United States District Court for the District of New Jersey; and further agree
and consent that personal service or process in any such action or proceeding
outside of the State of New Jersey and Morris County shall be tantamount to
service in person within the State of New Jersey and Morris County and shall
confer personal jurisdiction and venue upon either of the said courts.
(b) The Company and the Subscriber hereby covenant that this
Agreement is intended to and does contain and embody herein all of the
understandings and Agreements, both written or oral, of the Company and the
Subscriber with respect to the subject matter of this Agreement, and that there
exists no oral agreement or understanding, express or implied liability, whereby
the absolute, final and unconditional character and nature of this Agreement
shall be in any way invalidated, empowered or affected. There are no
representations, warranties or covenants other than those set forth herein.
(c) The headings of this Agreement are for convenient
reference only and they shall not limit or otherwise affect the interpretation
or effect of any terms or provisions hereof.
(d) This Agreement shall not be changed or terminated orally
except as set forth herein. All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by and
against the successors and assigns of the Company and the heirs, executors,
administrators and assigns of the Subscriber.
(e) A modification or waiver of any of the provisions of this
Agreement shall be effective only if made in writing and executed with the same
formality as this Agreement. The failure of either the Company or the Subscriber
to insist upon strict performance of any of the provisions of this Agreement
shall not be construed as a waiver of any subsequent default of the same or
similar nature, or of any other nature or kind.
9. BLUE SKY STATEMENTS.
(a) FOR NEW YORK RESIDENTS ONLY. The Subscriber agrees that
this Unit (or Notes) is being purchased for my own account for investment, and
not for distribution or resale to others. The Subscriber represents that the
Subscriber has adequate means of providing for the Subscriber's current needs
and possible personal contingencies, and that the Subscriber has no need for
liquidity of this investment.
19
<PAGE>
It is understood that all documents, records and books
pertaining to this investment have been made available for inspection by the
Subscriber and/or any representative thereof, and that the books and records of
the Company will be available upon reasonable notice, for inspection by
Subscriber during reasonable business hours at the Company's principal place of
business. The Attorney General of the State of New York does not pass upon or
endorse the merits of this or any private offering. Any representation to the
contrary is unlawful.
(b) FOR NEW JERSEY RESIDENTS ONLY. The Subscriber hereby
acknowledges to the New Jersey Bureau of Securities (the "Bureau") that the
Subscriber intends to purchase the Notes in the Company on or before the
Termination Date. The Subscriber further acknowledges that the Subscriber is
aware that the Notes are not registered with the Bureau and that the Bureau has
not passed upon or endorsed the merits of this offering.
The Subscriber warrants to the Bureau that the Subscriber
shall not promote, offer for sale, sell or otherwise transfer the securities at
any time unless they are registered with or expressly exempt from registration
by the Bureau.
THE SUBSCRIBER HEREBY REPRESENTS, WARRANTS, AGREES AND
ACKNOWLEDGES THAT THE SUBSCRIBER HAS RECEIVED, READ, UNDERSTOOD AND IS FAMILIAR
WITH THE RISKS ASSOCIATED WITH THE SUBSCRIBER'S INVESTMENT IN THE COMPANY AS SET
FORTH IN THIS AGREEMENT AND THE OFFERING PURSUANT TO WHICH THIS SUBSCRIPTION IS
BEING MADE. THE SUBSCRIBER FURTHER ACKNOWLEDGES THAT, EXCEPT AS SET FORTH IN
THIS AGREEMENT, NO REPRESENTATIONS OR WARRANTIES HAVE BEEN MADE TO THE
SUBSCRIBER, OR TO THE SUBSCRIBER'S ADVISORS, BY THE COMPANY, OR BY ANY PERSON
ACTING ON BEHALF OF THE COMPANY, WITH RESPECT TO THE NOTES, THE PROPOSED
BUSINESS OF THE COMPANY, THE DEDUCTIBILITY OF ANY ITEM FOR TAX PURPOSES, AND/OR
THE ECONOMIC, TAX, OR ANY OTHER ASPECTS OR CONSEQUENCES OF A PURCHASE OF THE
NOTES, AND THAT THE SUBSCRIBER HAS NOT RELIED UPON ANY INFORMATION CONCERNING
THE OFFERING, WRITTEN OR ORAL, OTHER THAN THAT CONTAINED IN THIS AGREEMENT.
20
<PAGE>
10. APPLICATION FOR INDIVIDUAL SUBSCRIBERS. Subscriber hereby offers to
purchase and subscribe to ________ principal amount of Notes and encloses
payment of $________________.
SIGNATURE PAGE
For Individuals
----------------------------------------
Signature of Individual Subscriber
----------------------------------------
Name of Individual Subscriber
----------------------------------------
Street Address - Residence
----------------------------------------
City, State and Zip Code
Social Security Number:
----------------------------------------
AGREED TO AND ACCEPTED:
As of February 8, 1999
TECHSCIENCE INDUSTRIES, INC.
BY: /s/ JAMES T. WOHL
-------------------------------------
James T. Woll, President
21
<PAGE>
10. APPLICATION FOR CORPORATE SUBSCRIBERS. Subscriber hereby
offers to purchase and subscribe to ________ principal amount of Notes and
encloses payment of $________________.
SIGNATURE PAGE
For Corporations
----------------------------------------
Name of Corporation
BY:
----------------------------------------
Signature of Executive Officer
----------------------------------------
Name and Title of Authorized
Signatory (please print)
----------------------------------------
Business Address
----------------------------------------
City, State and Zip Code
Tax Identification Number:
----------------------------------------
AGREED TO AND ACCEPTED:
As of February 8, 1999
TECHSCIENCE INDUSTRIES, INC.
BY: /s/ James T. Woll
-------------------------------------
James T. Woll,
President
22
<PAGE>
EXHIBIT "A"
9.6% CONVERTIBLE PROMISSORY NOTE
February 8, 1999 $6,200
FOR VALUE RECEIVED, Techscience Industries, Inc., a Delaware
corporation with principal offices at 3 Rockaway Place, Parsippany, New Jersey
07054 (hereinafter referred to as the "Maker") promises to pay to the order of
the individual, firm or entity indicated on the last page of this Note
(hereinafter referred to as the "Holder") in lawful money of the United States
of America, the principal sum of Six Thousand Two Hundred and 00/100 ($6,200)
Dollars with interest at a rate of nine and six tents (9.6%) percent per annum.
1. PAYMENTS.
(a) INTEREST. Unless sooner converted as hereinafter
enumerated, an interest payment of Fifty and 00/100 ($50) Dollars shall be
payable on the 30th business day following the date of this Note (the "Due
Date"). In the event that the required interest payment shall not be paid when
due, and shall remain unpaid for a period of five business (5) days or more,
then a late charge of two (2%) percent shall be due and owing for each month or
any portion thereof that such payment shall remain unpaid.
(b) PRINCIPAL. Unless sooner converted as hereinafter
enumerated, payment of the full principal amount due under this Note shall be
made on the Due Date. In the event that the principal shall not be paid on the
Due Date, and shall remain unpaid for a period of five business (5) days or
more, then a late charge of two (2%) percent shall be due and owing for each
month or any portion thereof that such payment shall remain unpaid.
2. CONVERSION.
At any time and from time to time prior to the Due Date but not
thereafter, the Holder shall have the right to convert the entire unpaid
principal balance and all unpaid interest but not less into theretofore
authorized but unissued, fully paid and non-assessable but unregistered (i.e.
restricted) shares of the Maker's Common stock, $.01 par value per share (
hereinafter referred to as the "Shares").
(a) CONVERSION PRICE. The price the Maker utilized in
determining how many Shares the Note Holder is to receive is $.0625 per Share
which price, although arbitrarily determined, is nonetheless hereby acknowledged
and accepted by the Maker and Holder as fair and equitable for a seed money
investment in shares of an inactive, disenfranchised shell corporation that are
restricted for 30 months. Accordingly, this Note shall be convertible into an
aggregate of 100,000 Shares.
(b) MANNER OF CONVERSION. On the Holder's presentation to
the Maker of a duly executed Notice of Conversion in the form annexed to this
Note together with the
23
<PAGE>
original executed copy of this Note, the Holder shall be entitled, subject to
the limitations herein contained, to receive in exchange therefor a certificate
or certificates for fully paid and non-assessable Shares, on the basis
enumerated herein. This Note shall be deemed to have been converted and the
person converting the same to have become the holder of record of Shares, for
the purpose of receiving dividends and for all other purposes whatsoever as of
the date when the Notice of Conversion and this Note are surrendered to the
Maker as aforesaid.
(c) NO FRACTIONAL SHARES. No fractional Shares shall be
issuable upon any conversion, it being intended and agreed that the number of
Shares to be received by a Holder upon conversion of this Note be rounded out to
the nearest whole share.
(d) RESERVATION OF SHARES. So long as any portion of the
principal amount of this Note shall remain unpaid, the Maker shall reserve and
keep available out of its authorized and unissued common share capitalization,
solely for the purpose of effecting the conversion of this Note, such number of
Shares as shall from time to time be sufficient to effect the conversion of the
unpaid principal balance and accrued interest of this Note. The Maker shall from
time to time increase its authorized common share capitalization and take such
other action as may be necessary to permit the issuance from time to time of the
Shares as fully paid and non-assessable securities upon the conversion of this
Note.
(e) PAYMENT OF TAXES. The Maker shall pay any and all taxes
which may be imposed upon it with respect to the issuance and delivery of the
Shares upon the conversion of this Note as herein provided. However, the Maker
shall not be required in any event, to pay any transfer or other taxes by reason
of the issuance of such Shares in names other than that of the Holder and no
such conversion or issuance of Shares shall be made unless and until the person
requesting such issuance has paid to the Holder the amount of any such tax, or
has established to the satisfaction of the Maker, and its transfer agent, if
any, that no such tax is payable or has been paid.
(f) DIVIDENDS. Upon any conversion of this Note, as herein
provided, no adjustment or allowance shall be made for accumulated dividends on
the Shares. All rights of the Holder to receive dividends, if any, shall
commence as of the date of conversion of this Note. Any dividends issuable on
the Shares shall be paid to the Escrowee (as that term is defined in an Escrow
Agreement to which the Maker and the Holder are a party and which is attached as
an exhibit to the Accredited Investor Subscription Agreement to which this Note
is attached as an exhibit).
(g) INVESTMENT REPRESENTATIONS. The Holder has been advised,
and by the acceptance of this Note, agrees and acknowledges that none of the
Shares issuable upon conversion of this Note shall have been registered under
the Securities Act of 1933, as amended (the "Act") or under any state securities
law; and that in including the conversion option in this Note, the Maker is
relying upon an exemption from registration based upon the Holder's investment
representations. In this regard, the Holder hereby represents and warrants to
the Maker that: (i) in the event the Holder avails him, her or itself of the
24
<PAGE>
conversion feature of this Note, the Holder will acquire the Shares for
investment purposes and without a view to the transfer or resale thereof;
(ii) in the event the Holder avails him, her or itself of the conversion feature
of this Note, the Holder will hold the Shares for 30 months; (iii) any sale of
the Shares will be accomplished only in accordance with the Act and the rules
and regulations of the Securities and Exchange Act adopted thereunder; and (iv)
the Holder hereby consents to the issuance by the Maker of a 30 month stop
transfer order against any and all certificates representing the Shares on the
books and records of the Maker and its transfer agent; and consents to the Maker
placing a 30 month investment legend on any and all certificates representing
the Shares.
(h) ADJUSTMENT OF CONVERSION RATE. The conversion rate
provided herein shall be subject to adjustment from time to time only in the
event that prior to the Holder's conversion of this Note any of the following
events (other than in connection with the consummation of the Maker's proposed
business combination with PetPlanet.com, Inc, and the four for twenty-five
reverse split contemplated thereby) occurs: (i) a reorganization,
recapitalization or stock split the outstanding Shares of Common stock of the
Maker are increased or decreased, or changed into or exchanged for a different
number or kind of shares of stock or securities of the Maker, or of another
corporation, or changed into or exchanged for cash; (ii) if all or substantially
all of the Maker's properties and assets are distributed to the holders of the
Maker's Common stock; or (iii) if there is a distribution upon the Shares by way
of a spin-off of any shares of capital stock or other securities of any
subsidiary or other corporation or entity. Then, upon any conversion hereof
after the record date for determination of the holders of the Shares entitled to
participate in any such event, the Holder hereof shall be entitled to receive
such kind and number of shares of stock or securities or other property or cash
as such Holder would have been entitled to receive had such Holder owned the
Shares issuable upon conversion at the time of that record date. If the event
involves another corporation or another entity, then the Maker shall, as part of
the transaction, make adequate provision for the Holder hereof thereafter to
receive the securities, property or cash to which such Holder is entitled under
this Section 2.
(i) RESTRICTIONS ON RESALE. The Shares received upon
conversion of the Note, shall be ineligible for public sale for a period of 30
months from the date of conversion. In addition, the Shares are subject to the
terms and conditions set forth in an Escrow Agreement to which the Maker and the
Holder are a party and which is attached as an exhibit to the Accredited
Investor Subscription Agreement to which this Note is attached as an exhibit.
3. EVENTS OF DEFAULT. The Maker shall be in default hereunder if: (a)
The Maker shall fail to pay interest on this Note when due and the failure shall
continue for a period of 30 days after notice of such default has been received
from the Holder; or; (b) default in the performance of any obligation to the
Holder hereof.
4. WAIVER OF PRESENTMENT, ETC. The Maker of this Note hereby waives
presentment for payment, demand, notice of non-payment and dishonor, protest and
notice
25
<PAGE>
of protest; and waives trial by jury in any action or proceeding arising on, out
of, under or by reason of this Note.
The rights and remedies of the Holder hereof under this Note shall be
deemed cumulative, and the exercise of any right or remedy shall not be regarded
as barring any other remedy or remedies. The institution of any action to
recovery any portion of the indebtedness evidenced by this Note shall not be
deemed a waiver of any other right of the Holder hereof.
5. STATUS OF REGISTERED HOLDER. The Maker may treat the registered
holder of this Note as the absolute owner of this Note for the purpose of making
payments of interest and for all other purposes and shall not be affected by any
notice to the contrary.
6. RESTRICTIVE LEGEND. The Holder agrees that a legend reading
substantially as follows may be placed on any and every certificate representing
all or any portion of the Shares:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended.
These shares have been acquired for investment and not
for distribution or resale for 30 months. They may not be
publicly sold mortgaged, pledged, hypothecated or
otherwise transferred without an effective registration
statement for such shares under the Securities Act of
1933, as amended or an opinion of counsel satisfactory to
the Company that registration is not required under such
Act."
7. NOTICES. Any notice required or contemplated by this Note shall be
deemed sufficiently given if sent by registered or certified mail or via
overnight courier to the Maker at its principal office or to the Holder at the
Holder's address shown on the books of the Maker or at such other address as the
Holder may delegate in a notice for that purpose and shall be deemed to have
been sent on the date of mailing or the airbill.
8. HEADINGS. The headings in this Note are solely for convenience of
reference and shall not affect its interpretation.
9. ASSIGNMENTS. This Note is binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, representatives and/or successors and assigns. Notwithstanding
the foregoing, neither the Maker nor the Holder shall assign or transfer any
rights or obligations hereunder, except that the Maker may assign or transfer
this Note to a successor corporation in the event of a merger, consolidation or
transfer or sale of all or substantially all of the assets of the Maker,
provided that no such further assignment shall relieve the Maker from liability
for the obligations assumed by it hereunder.
10. LAWS OF THE STATE OF NEW JERSEY. This Note shall be deemed to be
made, executed and delivered in, governed by and interpreted under and construed
in all respects
26
<PAGE>
in accordance with the laws of the State of New Jersey, irrespective of the
place of domicile or residence of any Holder. In the event of a controversy
arising out of the interpretation, construction, performance or breach of this
Agreement, the Maker and the Holder hereby agree and consent to the jurisdiction
and venue of the Superior Court of the State of New Jersey, Morris County and/or
the United States District Court for the District of New Jersey; and further
agree and consent that personal service or process in any such action or
proceeding outside of the State of New Jersey and Morris County shall be
tantamount to service in person within the State of New Jersey and Morris County
and shall confer personal jurisdiction and venue upon either of the said courts.
11. ENTIRE DOCUMENT. Each of the parties hereby covenants that this
Note is intended to and does contain and embody herein all of the understandings
and agreements, both written or oral, of the parties hereto with respect to the
subject matter of this Note, and that there exists no oral agreement or
understanding, express or implied, whereby the absolute, final and unconditional
character and nature of the Note shall be in any way invalidated, impaired or
affected. There are no provisions affecting or interpreting this Note other than
those set forth herein.
The acceptance of any installments or payments by the Holder hereof
after the due date herein, or the waiver of any other or subsequent breach or
default may prevent the Holder hereof from immediately pursuing any or all of
his remedies.
Techscience Industries, Inc.
BY: /s/ JAMES T. WOLL
-------------------------------------
James T. Woll, President
ACCEPTED:
- ----------------------------------------
(Print) Name of Holder
- ----------------------------------------
(Print) Town, State and Zip Code
- ----------------------------------------
(Print) Street Address of Holder
- ----------------------------------------
Signature of Holder
27
<PAGE>
- ----------------------------------------
Title of Corporate or Partnership Signer
- ----------------------------------------
Holder's Social Security Number
- ----------------------------------------
Holder's Taxpayer ID Number
28
<PAGE>
NOTICE OF CONVERSION
(To be signed only upon conversion of the Note.)
To Techscience Industries, Inc. (the "Company"):
The undersigned, the holder of this Note, hereby irrevocably elects to
exercise the conversion rights represented by this Note for, and to acquire
thereunder, pursuant to and in accordance with the terms of this Note, an
aggregate of ___________ shares of Common stock, $.001 par value per share (the
"Shares") of the Company at a conversion price of $.0625 per Share, and requests
that one certificate for such Shares be issued in the name of and be delivered
to the undersigned at the address appearing on the signature page of the
Accredited Investor Subscription Agreement dated February 8, 1999 between the
undersigned and the Company. This form shall represent the undersigned's
conversion of the entire unpaid amount of principal and accrued interest due to
the undersigned under the Note.
Dated:_____________________________ ___________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Note)
AGREED TO AND ACCEPTED:
Techscience Industries, Inc.
BY:/s/ GARY W. GILL
-----------------------------
Gary W. Gill, Treasurer
29
<PAGE>
EXHIBIT "B"
ESCROW AGREEMENT (the "Agreement") made this 8th day of
February 1999 among Techscience Industries, Inc., a Delaware corporation with
principal offices at 3 Rockaway Place, Parsippany, New Jersey 07054 (hereinafter
referred to as the "Company"), the individual, firm or entity indicated on the
last page of this Agreement (the "Investor") and Lester Yudenfriend, Esq., with
office at 1133 Broadway, Suite 321, New York, New York 10010 (the "Escrowee").
The Company, the Investor and the Escrowee are sometimes collectively referred
to as the "Parties".
W I T N E S S E T H :
WHEREAS, the Company and the Investor are party to an
Accredited Investor Subscription Agreement (the "Subscription Agreement") and
Convertible Promissory Note (the "Note") each dated February 8, 1999
(hereinafter collectively referred to as the "Agreements"), true copies of which
are attached hereto and incorporated herein by reference; and
WHEREAS, the Agreements provide for an aggregate of 400,000
shares of the Company's Common Stock, $.01 par value per share (the "Shares"),
to be delivered into escrow in the event the Investor exercises the conversion
privileges of the Note; and
WHEREAS, Paragraph 2 of the Subscription Agreement set forth
the condition precedent to the obligation of the Company to deliver the Shares
to the Investor; and
WHEREAS, the capitalized terms in this Agreement shall have
the meaning ascribed thereto in the Agreements; and
WHEREAS, the Parties desire to set forth the terms and
conditions governing the delivery of the Shares to the Investor.
NOW, THEREFORE, in consideration of the premises and mutual
covenants hereinafter set forth, the Parties hereby incorporate the foregoing
recitals into this Agreement and agree as follows:
1. CREATION OF ESCROW. By virtue of the execution of
this Agreement and the delivery of a certificate or certificates representing
the Shares to the Escrowee, the Company and the Investor hereby create the
escrow made the subject of this Agreement and hereby authorize the Escrowee to
deliver the Shares as hereinafter provided.
2. TERMS OF ESCROW. The following terms shall apply:
(a). DUTIES OF THE ESCROWEE UNDER THE NOTE
AND SUBSCRIPTION AGREEMENT. The Parties hereby agree that the Escrowee shall
accept delivery of and hold the Shares until either April 1, 1999
(the"Expiration Date") or the closing date of the Reorganization, whichever
sooner occurs. In the event the Reorganization shall not have closed on or
before 5:00pm Eastern Standard Time on the Expiration Date, and unless extended
by the written agreement of the Company and PPI, the Escrowee shall return the
Shares to the Company and furnish the Investor with written notice if such
return. Thereafter this Agreement shall automatically terminate and the Escrowee
shall be discharged without further action on behalf of any Party and without
further notice to the Company or the Investor. In the event the Reorganization
shall have closed on or before 5:00pm Eastern Standard Time on the Expiration
Date, the Escrowee shall deliver the Shares and any and all dividends paid or
accrued thereon to the Investor and furnish the Company with written notice if
such return. Thereafter this
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<PAGE>
Agreement shall automatically terminate and the Escrowee shall be discharged
without further action on behalf of any Party and without further notice to the
Company or the Investor.
(b). CONDITION PRECEDENT TO THE ESCROWEE'S
OBLIGATION TO DELIVER THE SHARES TO THE INVESTOR. Notwithstanding the closing of
the Reorganization on or before the Expiration Date, the Escrowee shall have no
duty or obligation to deliver the Shares to the Investor until and unless the
Investor shall have first exercised the conversion privileges of the Note and
furnished the Escrowee with acceptable written notice to such effect. For the
purposes of this Agreement, the only acceptable evidence of due conversion of
the Note into Shares shall be a Notice of Conversion in the form annexed to the
Note duly executed by the Investor and accepted thereon by the Company.
(c) COMPENSATION. The Escrowee shall
receive a flat fee and the reimbursement for disbursements in connection with
his time and expense incurred in fulfilling his obligation pursuant to this
Agreement in an amount to be agreed upon between the Escrowee and the Company.
The Company agrees to pay the agreed upon fee and disbursements to the Escrowee.
(d) NOTICE OF DEFAULT OR DISPUTE. If the
Escrowee shall received written notice that a dispute has occurred between the
Parties, the Escrowee may, at his sole discretion, notify the Parties and cease
his activities as Escrowee and deposit the Shares being held pursuant to this
Agreement with the American Arbitration Association, with offices at 140 West
51st Street, New York, New York 10020 in New York City. Upon such deposit or the
delivery of the Shares pursuant to this Paragraph 2(d), the Escrowee shall
automatically be relieved and fully discharged of all further obligations and
responsibilities hereunder. The Parties acknowledge that the Escrowee is acting
solely in his capacity as Escrowee at their request and for their convenience,
that the Escrowee shall not be deemed to be the agent of either of the Parties
nor shall he be liable for any act or omission on his part unless taken or
suffered in bad faith, in willful disregard of this Agreement or involving gross
negligence. The Company and the Investor hereby agree to jointly and severally
indemnify and hold the Escrowee harmless from and against all costs, claims and
expenses, including reasonable attorney's fees, incurred in connection with the
performance of the Escrowee' duties hereunder, except with respect to actions or
omissions taken or suffered by the Escrowee in bad faith, in willful disregard
of this Agreement or involving gross negligence on the part of the Escrowee. The
Parties hereby further agree that the arbitration provisions of the Agreement
shall supersede and control the jurisdiction and venue provisions of the
Agreements;
(e) RELIANCE. The Escrowee shall be
protected in acting upon any written notice, request, consent, certificate,
receipt, authorization or other paper or document which the Escrowee believes to
be genuine and what it purports to be;
(f) COUNSEL. The Escrowee may confer with
legal counsel in the event of any dispute or question as to the construction of
any of the provisions hereof, or his duties hereunder, and he shall incur no
liability and he shall be fully protected in acting in accordance with the
opinions and instructions of such counsel. Any and all expenses and legal fees
in this regard are payable from the Shares unless paid by the Parties.
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(g) REMEDIES OF ESCROWEE. The Escrowee is
hereby authorized in the event of any doubt as to the course of action he should
take under this Agreement, to petition the American Arbitration Association in
New York City only, for instructions or to interplead the Shares. The Parties
agree to the jurisdiction of the American Arbitration Association over their
persons as well as the Shares held by the Escrowee, waive personal service of
process, and agree that service of process by certified mail, return receipt
requested, to the address set forth herein shall constitute adequate notice of
service hereunder and shall confer personal jurisdiction on the American
Arbitration Association in New York City. The Parties hereby agree to indemnify
and hold the Escrowee harmless from any liability or losses occasioned thereby
and to pay any and all of his cost, expense and attorneys' fees incurred in any
such action and agree that on such petition or interpleader action that the
Escrowee or his employees will be relieved of further liability. The Escrowee is
hereby given a lien upon, and security interest in the Shares deposited pursuant
to this Agreement to secure the Escrowee's rights to payment or reimbursement.
(h) RESIGNATION. The Escrowee may resign
for any reason, upon thirty (30) days written notice to the Parties to the
Escrow Agreement. Upon the expiration of such thirty (30) day period, the
Escrowee may deliver the Shares in his possession under this Escrow Agreement to
any successor Escrowee appointed by the other Parties hereto, or if no successor
Escrowee has been appointed, to the American Arbitration Association in New York
City. Upon either such delivery, the Escrowee shall automatically be released
from any and all liability under this Agreement. Termination under this
Paragraph shall in no way change the terms of this Agreement concerning
reimbursement of expenses, indemnity and fees of the Escrowee.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the Investor and the Escrowee that all of the
representations, warranties and covenants contained in the Agreements are true
and correct and the same are hereby incorporated herein by this reference.
4. REPRESENTATIONS, WARRANTS AND COVENANTS OF THE INVESTOR.
The Investor hereby represents and warrants to the Company and the Escrowee that
all of the representations, warranties and covenants contained in the Agreements
are true and correct and the same are hereby incorporated herein by this
reference.
5. EXPENSES. The Investor hereby agrees to pay and be solely
responsible for the Investor's own legal fees incurred by the Investor in
connection with the transaction contemplated in this Agreement.
6. DIVIDENDS. So long as the Shares remain in escrow, all
dividends upon the Shares shall belong to the Company. However, the Escrowee
shall hold any and all dividends in escrow for disbursement in accordance with
the terms of Paragraph 2. of this Agreement.
7. VOTING. So long as the Shares remain in escrow, the
Company shall vote the Shares.
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8. ASSIGNMENTS AND SUCCESSORS. This Agreement shall not be
assigned by the Company or the Investor without the prior written consent of the
other. All of the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of and be enforceable by and against the heirs,
executors, administrators, successors and assigns of the Parties hereto.
9. ADDITIONAL INSTRUMENTS. Each of the Parties shall from
time to time, at the request of the others, execute, acknowledge and deliver to
the other any and all further instruments that may be reasonably required to
give full effect and force to the provisions of this Agreement.
10. ENTIRE AGREEMENT. Each of the Parties hereby covenants
that this Agreement is intended to and does contain and embody herein all of the
understandings and agreements, both written or oral, of the parties hereby with
respect to the subject matter of this Agreement, and that there exists no oral
agreement or understanding, express or implied liability, whereby the absolute,
final and unconditional character and nature of this Agreement shall be in any
way invalidated, empowered or affected. There are no representations, warranties
or covenants other than those set forth herein.
11. LAWS OF THE STATE OF NEW JERSEY. This Agreement shall be
governed by and interpreted under and construed in all respects in accordance
with the laws of the State of New Jersey, irrespective of the place of domicile
or residence of the Parties.
12. ORIGINALS. This Agreement may be executed in counterparts
each of which so executed shall be deemed an original and constitute one and the
same agreement.
13. ADDRESS OF PARTIES. Each Party shall at all times keep
informed of its principal place of residence or business if different from that
stated herein, and shall promptly notify the other of any change, giving the
address of the new principal place of business or residence.
14. NOTICES. All notices that are required to be or may be
sent pursuant to the provision of this Agreement shall be sent by certified
mail, return receipt requested, or via overnight courier, to each of the Parties
at the address appearing herein, and shall count from the date of mailing or the
airbill.
15. MODIFICATION AND WAIVER. A modification or waiver of any
of the provisions of this Agreement shall be effective only if made in writing
and executed with the same formality as this Agreement. The failure of any Party
to insist upon strict performance of any of the provisions of this Agreement
shall not be construed as a waiver of any subsequent default of the same or
similar nature or of any other nature or kind.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
Techscience Industries, Inc.
BY: /s/ GARY W. GILL
- --------------------------------------------
Gary W. Gill, Treasurer
- --------------------------------------------
Lester Yudenfriend, Esq., As Escrowee Only
FOR INDIVIDUAL INVESTORS:
- --------------------------------------------
Signature
- --------------------------------------------
Print name
- --------------------------------------------
Print Street Address
- --------------------------------------------
Print City, State and Zip Code
FOR CORPORATE INVESTORS:
- --------------------------------------------
Name of Corporation
BY:_________________________________________
Signature of Executive Officer or Manager
- --------------------------------------------
Print Name and Title of Authorized Signatory
- --------------------------------------------
Print Business Address
- --------------------------------------------
Print City, State and Zip Code
34
<PAGE>
ESCROW AGREEMENT (the "Agreement") made this 8th day of February 1999 among
Techscience Industries, Inc., a Delaware corporation with principal offices at 3
Rockaway Place, Parsippany, New Jersey 07054 (hereinafter referred to as the
"Company"), the individual, firm or entity indicated on the last page of this
Agreement (the "Investor") and Lester Yudenfriend, Esq., with office at 1133
Broadway, Suite 321, New York, New York 10010 (the "Escrowee"). The Company, the
Investor and the Escrowee are sometimes collectively referred to as the
"Parties".
W I T N E S S E T H :
WHEREAS, the Company and the Investor are party to an
Accredited Investor Subscription Agreement (the "Subscription Agreement") and
Convertible Promissory Note (the "Note") each dated February 8, 1999
(hereinafter collectively referred to as the "Agreements"), true copies of which
are attached hereto and incorporated herein by reference; and
WHEREAS, the Agreements provide for an aggregate of 400,000
shares of the Company's Common Stock, $.01 par value per share (the "Shares"),
to be delivered into escrow in the event the Investor exercises the conversion
privileges of the Note; and
WHEREAS, Paragraph 2 of the Subscription Agreement set forth
the condition precedent to the obligation of the Company to deliver the Shares
to the Investor; and
WHEREAS, the capitalized terms in this Agreement shall have
the meaning ascribed thereto in the Agreements; and
WHEREAS, the Parties desire to set forth the terms and
conditions governing the delivery of the Shares to the Investor.
NOW, THEREFORE, in consideration of the premises and mutual
covenants hereinafter set forth, the Parties hereby incorporate the foregoing
recitals into this Agreement and agree as follows:
1. CREATION OF ESCROW. By virtue of the execution of this
Agreement and the delivery of a certificate or certificates representing the
Shares to the Escrowee, the Company and the Investor hereby create the escrow
made the subject of this Agreement and hereby authorize the Escrowee to deliver
the Shares as hereinafter provided.
2. TERMS OF ESCROW. The following terms shall apply:
(a) DUTIES OF THE ESCROWEE UNDER THE NOTE AND
SUBSCRIPTION AGREEMENT. The Parties hereby agree that the Escrowee shall accept
delivery of and hold the Shares until either April 1, 1999 (the"Expiration
Date") or the closing date of the Reorganization, whichever sooner occurs. In
the event the Reorganization shall not have closed on or before 5:00pm Eastern
Standard Time on the Expiration Date, and unless extended by the written
agreement of the Company and PPI, the Escrowee shall return
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<PAGE>
the Shares to the Company and furnish the Investor with written notice if such
return. Thereafter this Agreement shall automatically terminate and the Escrowee
shall be discharged without further action on behalf of any Party and without
further notice to the Company or the Investor. In the event the Reorganization
shall have closed on or before 5:00pm Eastern Standard Time on the Expiration
Date, the Escrowee shall deliver the Shares and any and all dividends paid or
accrued thereon to the Investor and furnish the Company with written notice if
such return. Thereafter this Agreement shall automatically terminate and the
Escrowee shall be discharged without further action on behalf of any Party and
without further notice to the Company or the Investor.
(b) CONDITION PRECEDENT TO THE ESCROWEE'S OBLIGATION
TO DELIVER THE SHARES TO THE INVESTOR. Notwithstanding the closing of the
Reorganization on or before the Expiration Date, the Escrowee shall have no duty
or obligation to deliver the Shares to the Investor until and unless the
Investor shall have first exercised the conversion privileges of the Note and
furnished the Escrowee with acceptable written notice to such effect. For the
purposes of this Agreement, the only acceptable evidence of due conversion of
the Note into Shares shall be a Notice of Conversion in the form annexed to the
Note duly executed by the Investor and accepted thereon by the Company.
(c) COMPENSATION. The Escrowee shall receive a flat
fee and the reimbursement for disbursements in connection with his time and
expense incurred in fulfilling his obligation pursuant to this Agreement in an
amount to be agreed upon between the Escrowee and the Company. The Company
agrees to pay the agreed upon fee and disbursements to the Escrowee.
(d) NOTICE OF DEFAULT OR DISPUTE. If the Escrowee
shall received written notice that a dispute has occurred between the Parties,
the Escrowee may, at his sole discretion, notify the Parties and cease his
activities as Escrowee and deposit the Shares being held pursuant to this
Agreement with the American Arbitration Association, with offices at 140 West
51st Street, New York, New York 10020 in New York City. Upon such deposit or the
delivery of the Shares pursuant to this Paragraph 2(d), the Escrowee shall
automatically be relieved and fully discharged of all further obligations and
responsibilities hereunder. The Parties acknowledge that the Escrowee is acting
solely in his capacity as Escrowee at their request and for their convenience,
that the Escrowee shall not be deemed to be the agent of either of the Parties
nor shall he be liable for any act or omission on his part unless taken or
suffered in bad faith, in willful disregard of this Agreement or involving gross
negligence. The Company and the Investor hereby agree to jointly and severally
indemnify and hold the Escrowee harmless from and against all costs, claims and
expenses, including reasonable attorney's fees, incurred in connection with the
performance of the Escrowee' duties hereunder, except with respect to actions or
omissions taken or suffered by the Escrowee in bad faith, in willful disregard
of this Agreement or involving gross negligence on the part of the Escrowee. The
Parties hereby
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<PAGE>
further agree that the arbitration provisions of the Agreement shall supersede
and control the jurisdiction and venue provisions of the Agreements;
(e) RELIANCE. The Escrowee shall be protected in
acting upon any written notice, request, consent, certificate, receipt,
authorization or other paper or document which the Escrowee believes to be
genuine and what it purports to be;
(f) COUNSEL. The Escrowee may confer with legal
counsel in the event of any dispute or question as to the construction of any of
the provisions hereof, or his duties hereunder, and he shall incur no liability
and he shall be fully protected in acting in accordance with the opinions and
instructions of such counsel. Any and all expenses and legal fees in this regard
are payable from the Shares unless paid by the Parties.
(g) REMEDIES OF ESCROWEE. The Escrowee is hereby
authorized in the event of any doubt as to the course of action he should take
under this Agreement, to petition the American Arbitration Association in New
York City only, for instructions or to interplead the Shares. The Parties agree
to the jurisdiction of the American Arbitration Association over their persons
as well as the Shares held by the Escrowee, waive personal service of process,
and agree that service of process by certified mail, return receipt requested,
to the address set forth herein shall constitute adequate notice of service
hereunder and shall confer personal jurisdiction on the American Arbitration
Association in New York City. The Parties hereby agree to indemnify and hold the
Escrowee harmless from any liability or losses occasioned thereby and to pay any
and all of his cost, expense and attorneys' fees incurred in any such action and
agree that on such petition or interpleader action that the Escrowee or his
employees will be relieved of further liability. The Escrowee is hereby given a
lien upon, and security interest in the Shares deposited pursuant to this
Agreement to secure the Escrowee's rights to payment or reimbursement.
(h) RESIGNATION. The Escrowee may resign for any
reason, upon thirty (30) days written notice to the Parties to the Escrow
Agreement. Upon the expiration of such thirty (30) day period, the Escrowee may
deliver the Shares in his possession under this Escrow Agreement to any
successor Escrowee appointed by the other Parties hereto, or if no successor
Escrowee has been appointed, to the American Arbitration Association in New York
City. Upon either such delivery, the Escrowee shall automatically be released
from any and all liability under this Agreement. Termination under this
Paragraph shall in no way change the terms of this Agreement concerning
reimbursement of expenses, indemnity and fees of the Escrowee.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the Investor and the Escrowee that all of the
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<PAGE>
representations, warranties and covenants contained in the Agreements are true
and correct and the same are hereby incorporated herein by this reference.
4. REPRESENTATIONS, WARRANTS AND COVENANTS OF THE INVESTOR.
The Investor hereby represents and warrants to the Company and the Escrowee that
all of the representations, warranties and covenants contained in the Agreements
are true and correct and the same are hereby incorporated herein by this
reference.
5. EXPENSES. The Investor hereby agrees to pay and be solely
responsible for the Investor's own legal fees incurred by the Investor in
connection with the transaction contemplated in this Agreement.
6. DIVIDENDS. So long as the Shares remain in escrow, all
dividends upon the Shares shall belong to the Company. However, the Escrowee
shall hold any and all dividends in escrow for disbursement in accordance with
the terms of Paragraph 2. of this Agreement.
7. VOTING. So long as the Shares remain in escrow, the
Company shall vote the Shares.
8. ASSIGNMENTS AND SUCCESSORS. This Agreement shall not be
assigned by the Company or the Investor without the prior written consent of the
other. All of the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of and be enforceable by and against the heirs,
executors, administrators, successors and assigns of the Parties hereto.
9. ADDITIONAL INSTRUMENTS. Each of the Parties shall from
time to time, at the request of the others, execute, acknowledge and deliver to
the other any and all further instruments that may be reasonably required to
give full effect and force to the provisions of this Agreement.
10. ENTIRE AGREEMENT. Each of the Parties hereby covenants
that this Agreement is intended to and does contain and embody herein all of the
understandings and agreements, both written or oral, of the parties hereby with
respect to the subject matter of this Agreement, and that there exists no oral
agreement or understanding, express or implied liability, whereby the absolute,
final and unconditional character and nature of this Agreement shall be in any
way invalidated, empowered or affected. There are no representations, warranties
or covenants other than those set forth herein.
11. LAWS OF THE STATE OF NEW JERSEY. This Agreement shall be
governed by and interpreted under and construed in all respects in accordance
with the laws of the State of New Jersey, irrespective of the place of domicile
or residence of the Parties.
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<PAGE>
12. ORIGINALS. This Agreement may be executed in counterparts
each of which so executed shall be deemed an original and constitute one and the
same agreement.
13. ADDRESS OF PARTIES. Each Party shall at all times keep
informed of its principal place of residence or business if different from that
stated herein, and shall promptly notify the other of any change, giving the
address of the new principal place of business or residence.
14. NOTICES. All notices that are required to be or may be
sent pursuant to the provision of this Agreement shall be sent by certified
mail, return receipt requested, or via overnight courier, to each of the Parties
at the address appearing herein, and shall count from the date of mailing or the
airbill.
15. MODIFICATION AND WAIVER. A modification or waiver of any
of the provisions of this Agreement shall be effective only if made in writing
and executed with the same formality as this Agreement. The failure of any Party
to insist upon strict performance of any of the provisions of this Agreement
shall not be construed as a waiver of any subsequent default of the same or
similar nature or of any other nature or kind.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
Techscience Industries, Inc.
BY: /s/ JAMES T. WOLL
- -------------------------------------------
James T. Woll, President
- -------------------------------------------
Lester Yudenfriend, Esq., As Escrowee Only
FOR INDIVIDUAL INVESTORS:
- -------------------------------------------
- -------------------------------------------
- -------------------------------------------
39
<PAGE>
EXHIBIT 10(e) ACCREDITED INVESTOR BRIDGE LOAN SUBSCRIPTION AGREEMENT
40
<PAGE>
TECHSCIENCE INDUSTRIES, INC.
ACCREDITED INVESTOR BRIDGE LOAN SUBSCRIPTION AGREEMENT (the
"Agreement") dated February 19, 1999 between Techscience Industries, Inc., a
Delaware corporation with principal offices at 3 Rockaway Place, Parsippany, New
Jersey 07054 (the "Company") and the person or persons executing this Agreement
on the last page (the "Subscriber").
1. DESCRIPTION OF THE OFFERING. This Agreement sets forth the terms
under which the Subscriber will invest in the Company. This subscription is for
six units comprised of $25,000 principal amount of a 10% promissory note in the
from annexed hereto as Exhibit 8 (the "Note") and 16,666 shares of the Company's
Common Stock, $.01 par value per share. The Notes are due and payable on the
closing date of the Reorganization with PPI, currently scheduled for April 1,
1999 but subject to extension by mutual consent of the Company and PPI (the
"Closing"). The full principal amount of the Note and all accrued interest will
be repaid at the Closing. The shares, which are being included in the Units In
consideration for the risk assumed by each Subscriber, will be issued to the
Subscribers at the Closing. The shares will be "restricted securities" as that
term is defined under Rule 144 under the Act and ineligible for public sale for
a period of 12 months from the date of issuance. This subscription is one of six
subscriptions for six Units or an aggregate of $150,000 if all offered Units are
sold. The Units are being offered under and pursuant to Rule 506 of Regulation D
(the "Rule") under the Securities Act of 1933, as amended (the "Act") for a
period of 30 days, subject to a single extension of 5 days. This offering is
being conducted solely to "Accredited Investors" as that term is defined in Rule
501(a) of Regulation D under the Act for the purpose of providing PetPlanet.com,
Inc., a non-affiliated California corporation ("PPI") with the funds to
accelerate the implementation of its business plan, a copy of which is annexed
hereto as Exhibit 5. The implementation of the PPI business plan is the rational
behind the Company's proposed business combination with PPI wherein the Company
will acquire all of the issued and outstanding shares of PPI's common stock,
$.01 par value per share, solely in exchange for the issuance of an aggregate of
7,325,000 Shares of the Company (the "Reorganization").
In furtherance of the reorganization, and on February 10, 1999, the Company
entered into the LOI PPI. The LOI provides that the Company and PPI will enter
into a written Agreement and Plan of Reorganization (the "Reorganization
Agreement") by March 1, 1999. After the Reorganization, the PPI stockholders
will own approximately 76.5% of the 9,575,000 shares of the Company that will
then be issued and outstanding. At the closing of the Reorganization, each
executive officer and director of The Company will resign, and be replaced by
directors nominated by PPI's stockholders.
2. TERMS OF THE OFFERING. The Units are being offered by the Company
on a best-efforts-four-Unit-or-none basis. In the event that a minimum of four
Units are not sold and paid for within 35 days from the date of this Memorandum,
or the Offering is abandoned, all funds received from subscribers will be
returned without interest thereon or deduction therefrom. Pending the sale of a
minimum of four Units, all checks representing an investment in the Units will
held by the Company and not deposited in any checking or other account. In the
event the four Units are
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<PAGE>
not sold within 35 days from February 19, 1999, all checks representing an
investment in the Units will be promptly returned to Subscribers without
interest thereon or deduction therefrom. In the event a minimum of four Units
are sold within 35 days from the date of this Memorandum, the Company may
continue to sell the remaining Units until the expiration of the aforesaid 35
day Offering period.
The Units are being offered by the officers and directors of the Company without
compensation. The Units may also be offered on a best-efforts basis by
registered broker dealers that are members of the National Association of
Securities Dealers, Inc. ("Selling Agents"). In the event that the services of
Selling Agents are used, the Company will enter into a written Selected Dealer
Agreement with such Selling Agent and thereafter pay a 10% commission on all
such sales, and non-accountable selling expenses up to 3%.
The Execution of this Agreement shall constitute an offer by the Subscriber to
subscribe to the Units in the amount and on the terms specified herein. The
Company reserves the right, in its sole discretion, to reject in whole or in
part, any subscription offer. If the Subscriber's offer is accepted, the Company
will execute a copy of this Agreement and return it to Subscriber together with
a duly executed Note in the form annexed hereto as Exhibit 8. Upon execution of
this Agreement, the Company will instruct its transfer agent to cause the
original issuance of certificates representing the Shares and the delivery
thereof to the Subscriber at such address as she shall designate.
3. SUBSCRIPTION PAYMENT. Subscription to each Unit requires a minimum
total cash investment of $25,000. The subscription price will be payable in cash
in full on subscription.
4. THE COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company hereby
represents and warrants as follows:
(a) At the Closing, the Company will be a corporation duly
formed and in good standing under the laws of the State of Delaware with full
power and authority to conduct its business as presently contemplated;
(b) The Company has the corporate power to execute, deliver
and perform this Agreement, the LOI in the time and manner contemplated; and
(c) The Shares issuable to Subscribers have been reserved for
issuance and when issued, will be duly and validly issued, fully paid and
non-assessable with no personal liability attaching to the ownership thereof.
5. SUBSCRIBER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. The
Subscriber hereby represents, warrants and covenants as follows:
(a) The Subscriber is an entity, and is an "Accredited
Investor" as defined in Rule 501(a) of Regulation D under the Act. This
representation is based on the fact that the Subscriber is an accredited
individual who, together with the Subscriber's spouse, have a net worth of at
least $1,000,000 OR the Subscriber, individually, has had net income of not less
than
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$200,000 during the last two years, and reasonably anticipates that the
Subscriber will have an income of at least $200,000 during the present year and
the next year;
(b) If the Subscriber is a corporation, partnership, trust or
any unincorporated association: (i) the person executing this Subscription
Agreement does so with full right, power and authority to make this investment;
(ii) that such entity was not formed for the specific purpose of making an
investment in the Company; and (iii) that all further representations and
warranties made herein are true and correct with respect to such corporation,
partnership, trust and unincorporated association;
(c) The address set forth below is the Subscriber's true and
correct residence, and the Subscriber has no present intention of becoming a
resident of any state or jurisdiction;
(d) The Subscriber has received and read or reviewed, is
familiar with and fully understands the due diligence material furnished by the
Company, annexed to this Agreement and comprising, inter alia: (i) a draft copy
of the Company's Form 10-KSB Annual Report for the eight fiscal years ended
October 31, 1998; (ii) audited financial statements for the five fiscal years
ended October 31, 1995; (iii) draft audited financial statements for the six
fiscal years ended October 31, 1996; (iv) the LOI; and (v) a copy of PPI's
Business Plan including three year cash flow projections and assumptions. The
Subscriber also fully understands this Agreement and the risks associated with
this offering, the Company's complete lack of operating history since 1990, and
confirms that all documents, records and books pertaining to the Subscriber's
investment in the Units and requested by the Subscriber have been made available
or delivered to the Subscriber by the Company;
(e) The Subscriber hereby specifically acknowledges and
accepts that the Subscriber is fully aware of the following HIGH RISK FACTORS:
(i) The Company is a "shell corporation" with no
operations since 1990;
(ii) The Company is presently delinquent in its
reporting obligations under the 34 Act and has been so delinquent since 1991;
(iii) Unless the Company becomes current under the 34
Act, the Subscriber will not be able to take advantage of Rule 144 under the
Act, as a means of selling the Shares;
(iv) Even if the Company is successful in becoming
current in its reporting obligations under the 34 Act, the Subscriber will be
unable to take advantage of Rule 144 under the Act, as a means of selling the
Shares until and unless the Subscriber has held the Shares for 12 months;
(v) There is currently no market for the Shares.
Although the Company intends to initiate a trading market in the Shares of the
Company's common stock following the closing of the Reorganization, there can be
absolutely no assurance thereof;
(vi) There can be no assurance whatsoever that the
Company will be successful in consummating the Reorganization with PPI or that
even if the Reorganization is
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completed, that PPI will be successful in implementing its proposed Internet
based business plan;
(vii) Even if the Reorganization is completed, there
can be no assurance that PPI, a development stage company without income from
operations, will be successful in implementing its proposed Internet business
plan without the need for additional capital to satisfy its projected working
capital needs through the next 12 months. The failure of PPI to raise the
requisite capital may have a material adverse effect upon the value of the
Shares and its ability to remain in business.
(viii) As of the closing of the Reorganization and
the Company's acquisition of PPI, the Company will succeed to the business of
PPI. PPI must be considered as a start up company. A purchaser of the Shares
should be aware of the difficulties, delays and expenses normally encountered by
a start up operation. Furthermore, there can be no assurance that PPI's proposed
Internet business plans as described in the exhibits annexed hereto will either
materialize or prove successful. Accordingly, there can be no assurance that PPI
will ever operate profitably.
(ix) For all of the reasons set forth above, the
Subscriber should be prepared to lose his entire investment in the Units.
(f) The Subscriber has had an opportunity to ask questions of
and receive answers from the Company or a person or persons acting on its
behalf, concerning the terms and conditions of this investment and confirms that
all documents, records and books pertaining to the investment in the Units and
requested by the Subscriber has been made available or delivered to the
Subscriber;
(g) The Subscriber will be acquiring the Shares solely for the
Subscriber's own account, for investment and are not with a view to or for the
resale, distribution, subdivision or fractionalization thereof; and the
Subscriber has no present plans to enter into any such contract, undertaking,
agreement or arrangement;
(h) The funds tendered to the Company in payment of the Units
subscribed for hereby belong to the Subscriber, and no other individual or
entity has any interest in such funds. Furthermore, and regardless of the nature
of such funds (i.e., whether in cash, personal, cashiers, bank or certified
check) the same represent legal income of the Subscriber;
(i) The Subscriber understands that the Shares must be held
for a minimum of 12 months prior to any public sale thereof;
(j) The Subscriber understands that the Company is under no
obligation to register the Shares under the Act or to comply with the
requirements for any exemption which might otherwise be available, or to supply
the Subscriber with any information necessary to enable the Subscriber to make
routine sales of the Shares under Rule 144 or any other rule of the Rules and
Regulations of the Securities and Exchange Commission adopted under the Act;
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(k) The Subscriber's compliance with the terms and conditions
of this Agreement will not conflict with any instrument or agreement pertaining
to the Shares or the Units or the transactions contemplated herein; and will not
conflict in, result in a breach of, or constitute a default under any instrument
to which the Subscriber is a party or the Shares or the Shares is the subject;
(l) The Subscriber will seek his own legal and tax advice
concerning tax implications attendant upon the purchase of the Units and
understands and accepts that the Company is relying upon this representation
insofar as disclosure of tax matters is concerned;
(m) The Subscriber hereby acknowledges and represents that the
Subscriber is aware of the following:
(i) The Units are speculative investments which
involve a high degree of risk; and
(ii) The closing of the Reorganization is
specifically conditioned upon the Company satisfying all of the conditions
precedent set forth in the LOI including the preparation of audited financial
statement, the filing of all delinquent 34 Act filings, and the sale of all of
the 250,000 privately offered shares at $4.00 per share by April 1, 1999. There
can be no assurance that the Company will be able to satisfy the conditions
precedent by April 1, 1999.
The foregoing representations and warranties are true and accurate as
of the date hereof and shall be true and accurate as of the date of delivery of
the subscription to the Company and shall survive such delivery. If, in any
respect, such representations and warranties shall not be true and accurate, the
Subscriber shall give written notice of such fact to the Company, specifying
which representations and warranties are not true and accurate and the reasons
therefor.
6. RESPONSIBILITY. The Company or its officers and directors shall not
be liable, responsible or accountable in damages or otherwise to Subscriber for
any act or omission performed or omitted by them in good faith and in a manner
reasonably believed by them to be within the scope of the authority granted to
them by this Agreement and in the best interests of the Company provided they
were not guilty of gross negligence, willful or wanton misconduct, fraud, bad
faith or any other breach of fiduciary duty with respect to such acts or
omissions.
7. MISCELLANEOUS.
(a) This Agreement shall be deemed to have been made in and
shall be governed by and interpreted under and construed in all respects in
accordance with the laws of the State of New Jersey, irrespective of the place
of domicile or residence of any party. In the event of a controversy arising out
of the interpretation, construction, performance or breach of this Agreement,
the Company and the Subscriber hereby agree and consent to the jurisdiction and
venue of the Superior Court of the State of New Jersey, Morris County and/or the
United States District Court for the District of New Jersey; and further agree
and consent that personal service or process in any such action or proceeding
outside of the State of New Jersey and Morris County shall be tantamount to
service in person within the State of New Jersey and Morris
45
<PAGE>
County and shall confer personal jurisdiction and venue upon either of the said
courts.
(b) The Company and the Subscriber hereby covenant that this
Agreement is intended to and does contain and embody herein all of the
understandings and Agreements, both written or oral, of the Company and the
Subscriber with respect to the subject matter of this Agreement, and that there
exists no oral agreement or understanding, express or implied liability, whereby
the absolute, final and unconditional character and nature of this Agreement
shall be in any way invalidated, empowered or affected. There are no
representations, warranties or covenants other than those set forth herein.
(c) The headings of this Agreement are for convenient
reference only and they shall not limit or otherwise affect the interpretation
or effect of any terms or provisions hereof.
(d) This Agreement shall not be changed or terminated orally
except as set forth herein. All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by and
against the successors and assigns of the Company and the heirs, executors,
administrators and assigns of the Subscriber.
(e) In addition to the investment representations made by the
Subscriber in Paragraph 5 of this Agreement, the Subscriber hereby agrees that
simultaneously with the execution of this Agreement, he will execute and deliver
to the Company the form of Investment Letter attached hereto. The Subscriber
hereby consents to the issuance by the Company of a stop transfer order against
any and all certificates representing the Shares on the books and records of the
Company and/or its transfer agent.
(f) A modification or waiver of any of the provisions of this
Agreement shall be effective only if made in writing and executed with the same
formality as this Agreement. The failure of either the Company or the Subscriber
to insist upon strict performance of any of the provisions of this Agreement
shall not be construed as a waiver of any subsequent default of the same or
similar nature, or of any other nature or kind.
8. BLUE SKY STATEMENTS.
(a) FOR NEW YORK RESIDENTS ONLY. The Subscriber agrees that
this Unit (or Units) is being purchased for my own account for investment, and
not for distribution or resale to others. The Subscriber represents that the
Subscriber has adequate means of providing for the Subscriber's current needs
and possible personal contingencies, and that the Subscriber has no need for
liquidity of this investment.
It is understood that all documents, records and books pertaining to
this investment have been made available for inspection by the Subscriber and/or
any representative thereof, and that the books and records of the Company will
be available upon reasonable notice, for inspection by Subscriber during
reasonable business hours at the Company's principal place of business. The
Attorney General of the State of New York does not pass upon or endorse the
merits of this or any private offering. Any representation to the contrary is
unlawful.
46
<PAGE>
(b) FOR NEW JERSEY RESIDENTS ONLY. The Subscriber hereby
acknowledges to the New Jersey Bureau of Securities (the "Bureau") that the
Subscriber intends to purchase the Units in the Company on or before the
Termination Date. The Subscriber further acknowledges that the Subscriber is
aware that the Units are not registered with the Bureau and that the Bureau has
not passed upon or endorsed the merits of this offering.
The Subscriber warrants to the Bureau that the Subscriber shall not
promote, offer for sale, sell or otherwise transfer the securities at any time
unless they are registered with or expressly exempt from registration by the
Bureau.
THE SUBSCRIBER HEREBY REPRESENTS, WARRANTS, AGREES AND ACKNOWLEDGES
THAT THE SUBSCRIBER HAS RECEIVED, READ, UNDERSTOOD AND IS FAMILIAR WITH THE
RISKS ASSOCIATED WITH THE SUBSCRIBER'S INVESTMENT IN THE COMPANY AS SET FORTH IN
THIS AGREEMENT AND THE OFFERING PURSUANT TO WHICH THIS SUBSCRIPTION IS BEING
MADE. THE SUBSCRIBER FURTHER ACKNOWLEDGES THAT, EXCEPT AS SET FORTH IN THIS
AGREEMENT, NO REPRESENTATIONS OR WARRANTIES HAVE BEEN MADE TO IT, OR TO ITS
ADVISORS, BY THE COMPANY, OR BY ANY PERSON ACTING ON BEHALF OF THE COMPANY, WITH
RESPECT TO THE UNITS, THE PROPOSED BUSINESS OF THE COMPANY, THE DEDUCTIBILITY OF
ANY ITEM FOR TAX PURPOSES, AND/OR THE ECONOMIC, TAX, OR ANY OTHER ASPECTS OR
CONSEQUENCES OF A PURCHASE OF A UNIT AND/OR ANY INVESTMENT IN THE COMPANY, AND
THAT IT HAS NOT RELIED UPON ANY INFORMATION CONCERNING THE OFFERING, WRITTEN OR
ORAL, OTHER THAN THAT CONTAINED IN THIS AGREEMENT.
9. APPLICATION FOR INDIVIDUAL SUBSCRIBERS. The Subscriber hereby offers
to purchase and subscribe to three Units and encloses payment of $25,000 per
Unit or an aggregate investment of $75,000.
-----------------------------
AGREED TO AND ACCEPTED:
As of February , 1999
TECHSCIENCE INDUSTRIES, INC.
BY: /s/ JAMES T. WOLL
-------------------------------
James T. Woll, President
47
<PAGE>
INVESTMENT LETTER
Board of Directors
Techscience Industries, Inc
3 Rockaway Place
Parsippany, New Jersey 07054
Gentlemen:
In connection with the purchase by the undersigned as of February ,1999
for one or more of the Units being offered by Techscience Industries, Inc., a
Delaware corporation (the "Company") and delivery to the undersigned of shares
of the Company's common stock,$.01 par value per share(the "Shares"), the
undersigned for himself/itself, and his/its heirs, representatives, executors,
administrators, successors and assigns, represents, warrants and agrees with the
Company as follows with respect to the Shares:
1. The undersigned will be acquiring the Shares comprising the Shares
for investment and not with a view to the distribution thereof and is familiar
with the meaning of such representation and covenants and understands the
restrictions which are imposed thereby. More specifically, but without
limitation, the undersigned understands that in the view of the Securities and
Exchange Commission, one who acquires securities for investment is not exempt
from the registration requirements of the Securities Act of 1933, as amended
(the "Act"), if he merely acquires such securities for resale upon the
occurrence or non-occurrence of some predetermined event or for holding for a
fixed or determinable period in the future.
2. The undersigned will be acquiring the Shares comprising the Shares
solely for the undersigned's own account and no other person or entity has any
direct or indirect beneficial ownership or interest therein.
3. The Undersigned hereby represents and warrants that he has a net
worth substantially in excess of the cost of the Shares to the undersigned and
in the event the undersigned shall incur a loss in the Shares, it would not
materially affect the undersigned's financial condition.
4. The undersigned has been advised that in reliance on the
representations, warranties and agreements herein made by the undersigned, the
issuance, and delivery of the Shares comprising the Shares to the undersigned
will not be registered under the Act on the ground that the issuance thereof is
exempt from registration by virtue of Sections 4(2) and/or 3(b) thereof.
5. The undersigned represents to the Company that the undersigned has
such knowledge and experience in financial and business matters that the
undersigned is capable of evaluating and understanding the merits and risks
attendant upon the investment in the Company represented by the acquisition of
the Shares.
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<PAGE>
6. The undersigned represents and warrants to the Company that the
investment in the Company represented by the purchase of the Shares came about
as a result of direct communications between the Company and the undersigned,
and did not result from any form of general advertising or general solicitation
including but not limited to, advertisements or other communications in
newspapers, magazines, or other media; broadcasts on radio or television,
seminars or promotional meetings or any letter, circular or other written
communication.
7. The undersigned will hold the Shares comprising the Shares for 12
months before any sale thereof under Rule 144.
Very truly yours,
---------------------------------------
---------------------------------------
49
<PAGE>
EXHIBIT "B"
10% PROMISSORY NOTE
February 19, 1999 $75,000
FOR VALUE RECEIVED, Techscience Industries, Inc., a Delaware
corporation with principal offices at 3 Rockaway Place, Parsippany, New Jersey
07054 (hereinafter referred to as the "Maker") promises to pay to the order of
James T. Patten with offices at Post Office Box 682, Bernardsville, New Jersey
07924 (hereinafter referred to as the "Holder") in lawful money of the United
States of America, the principal sum of Seventy Five Thousand and 00/100
($75,000) Dollars with interest at a rate of ten (10%) percent per annum.
1. PAYMENTS.
(a) INTEREST. An interest payment of Two Hundred Ten and
00/100 ($210) Dollars shall be payable on the 30th business day following the
date of this Note (the "Due Date"). In the event that the required interest
payment shall not be paid when due, and shall remain unpaid for a period of five
business (5) days or more, then a late charge of two (2%) percent shall be due
and owing for each month or any portion thereof that such payment shall remain
unpaid.
(b) PRINCIPAL. Payment of the full principal amount due under
this Note shall be made on the Due Date. In the event that the principal shall
not be paid on the Due Date, and shall remain unpaid for a period of five
business (5) days or more, then a late charge of two (2%) percent shall be due
and owing for each month or any portion thereof that such payment shall remain
unpaid.
2. EVENTS OF DEFAULT. The Maker shall be in default hereunder if: (a)
The Maker shall fail to pay interest on this Note when due and the failure shall
continue for a period of 30 days after notice of such default has been received
from the Holder; or; (b) default in the performance of any obligation to the
Holder hereof.
3. WAIVER OF PRESENTMENT, ETC. The Maker of this Note hereby waives
presentment for payment, demand, notice of non-payment and dishonor, protest and
notice of protest; and waives trial by jury in any action or proceeding arising
on, out of, under or by reason of this Note.
The rights and remedies of the Holder hereof under this Note shall be
deemed cumulative, and the exercise of any right or remedy shall not be regarded
as barring any other remedy or remedies. The institution of any action to
recovery any portion of the
50
<PAGE>
indebtedness evidenced by this Note shall not be deemed a waiver of any other
right of the Holder hereof.
4. STATUS OF REGISTERED HOLDER. The Maker may treat the registered
holder of this Note as the absolute owner of this Note for the purpose of making
payments of interest and for all other purposes and shall not be affected by any
notice to the contrary.
5. NOTICES. Any notice required or contemplated by this Note shall be
deemed sufficiently given if sent by registered or certified mail or via
overnight courier to the Maker at its principal office or to the Holder at the
Holder's address shown on the books of the Maker or at such other address as the
Holder may delegate in a notice for that purpose and shall be deemed to have
been sent on the date of mailing or the airbill.
6. HEADINGS. The headings in this Note are solely for convenience of
reference and shall not affect its interpretation.
7. ASSIGNMENTS. This Note is binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, representatives and/or successors and assigns. Notwithstanding
the foregoing, neither the Maker nor the Holder shall assign or transfer any
rights or obligations hereunder, except that the Maker may assign or transfer
this Note to a successor corporation in the event of a merger, consolidation or
transfer or sale of all or substantially all of the assets of the Maker,
provided that no such further assignment shall relieve the Maker from liability
for the obligations assumed by it hereunder.
8. LAWS OF THE STATE OF NEW JERSEY. This Note shall be deemed to be
made, executed and delivered in, governed by and interpreted under and construed
in all respects in accordance with the laws of the State of New Jersey,
irrespective of the place of domicile or residence of any Holder. In the event
of a controversy arising out of the interpretation, construction, performance or
breach of this Agreement, the Maker and the Holder hereby agree and consent to
the jurisdiction and venue of the Superior Court of the State of New Jersey,
Morris County and/or the United States District Court for the District of New
Jersey; and further agree and consent that personal service or process in any
such action or proceeding outside of the State of New Jersey and Morris County
shall be tantamount to service in person within the State of New Jersey and
Morris County and shall confer personal jurisdiction and venue upon either of
the said courts.
9. ENTIRE DOCUMENT. Each of the parties hereby covenants that this
Note is intended to and does contain and embody herein all of the understandings
and agreements, both written or oral, of the parties hereto with respect to the
subject matter of this Note, and that there exists no oral agreement or
understanding, express or implied, whereby the absolute, final and unconditional
character and nature of the Note shall be in any way
51
<PAGE>
invalidated, impaired or affected. There are no provisions affecting or
interpreting this Note other than those set forth herein.
The acceptance of any installments or payments by the Holder hereof
after the due date herein, or the waiver of any other or subsequent breach or
default may prevent the Holder hereof from immediately pursuing any or all of
his remedies.
Techscience Industries, Inc.
BY: /s/ JAMES T. WOLL
-------------------------------------
James T. Woll, President
ACCEPTED:
/s/ JAMES T. PATTEN
- --------------------------------
James T. Patten
52
<PAGE>
EXHIBIT "B"
10% PROMISSORY NOTE
February 19, 1999 $75,000
FOR VALUE RECEIVED, Techscience Industries, Inc., a Delaware
corporation with principal offices at 3 Rockaway Place, Parsippany, New Jersey
07054 (hereinafter referred to as the "Maker") promises to pay to the order of
R. Scott Caputo with offices at Post Office Box 335, Bridgewater, New Jersey
07921 (hereinafter referred to as the "Holder") in lawful money of the United
States of America, the principal sum of Seventy Five Thousand and 00/100
($75,000) Dollars with interest at a rate of ten (10%) percent per annum.
1. PAYMENTS.
(a) INTEREST. An interest payment of Two Hundred Ten and
00/100 ($210) Dollars shall be payable on the 30th business day following the
date of this Note (the "Due Date"). In the event that the required interest
payment shall not be paid when due, and shall remain unpaid for a period of five
business (5) days or more, then a late charge of two (2%) percent shall be due
and owing for each month or any portion thereof that such payment shall remain
unpaid.
(b) PRINCIPAL. Payment of the full principal amount due under
this Note shall be made on the Due Date. In the event that the principal shall
not be paid on the Due Date, and shall remain unpaid for a period of five
business (5) days or more, then a late charge of two (2%) percent shall be due
and owing for each month or any portion thereof that such payment shall remain
unpaid.
2. EVENTS OF DEFAULT. The Maker shall be in default hereunder if: (a)
The Maker shall fail to pay interest on this Note when due and the failure shall
continue for a period of 30 days after notice of such default has been received
from the Holder; or; (b) default in the performance of any obligation to the
Holder hereof.
3. WAIVER OF PRESENTMENT, ETC. The Maker of this Note hereby waives
presentment for payment, demand, notice of non-payment and dishonor, protest and
notice of protest; and waives trial by jury in any action or proceeding arising
on, out of, under or by reason of this Note.
The rights and remedies of the Holder hereof under this Note shall be
deemed cumulative, and the exercise of any right or remedy shall not be regarded
as barring any other remedy or remedies. The institution of any action to
recovery any portion of the
53
<PAGE>
indebtedness evidenced by this Note shall not be deemed a waiver of any other
right of the Holder hereof.
4. STATUS OF REGISTERED HOLDER. The Maker may treat the registered
holder of this Note as the absolute owner of this Note for the purpose of making
payments of interest and for all other purposes and shall not be affected by any
notice to the contrary.
5. NOTICES. Any notice required or contemplated by this Note shall be
deemed sufficiently given if sent by registered or certified mail or via
overnight courier to the Maker at its principal office or to the Holder at the
Holder's address shown on the books of the Maker or at such other address as the
Holder may delegate in a notice for that purpose and shall be deemed to have
been sent on the date of mailing or the airbill.
6. HEADINGS. The headings in this Note are solely for convenience of
reference and shall not affect its interpretation.
7. ASSIGNMENTS. This Note is binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, representatives and/or successors and assigns. Notwithstanding
the foregoing, neither the Maker nor the Holder shall assign or transfer any
rights or obligations hereunder, except that the Maker may assign or transfer
this Note to a successor corporation in the event of a merger, consolidation or
transfer or sale of all or substantially all of the assets of the Maker,
provided that no such further assignment shall relieve the Maker from liability
for the obligations assumed by it hereunder.
8. LAWS OF THE STATE OF NEW JERSEY. This Note shall be deemed to be
made, executed and delivered in, governed by and interpreted under and construed
in all respects in accordance with the laws of the State of New Jersey,
irrespective of the place of domicile or residence of any Holder. In the event
of a controversy arising out of the interpretation, construction, performance or
breach of this Agreement, the Maker and the Holder hereby agree and consent to
the jurisdiction and venue of the Superior Court of the State of New Jersey,
Morris County and/or the United States District Court for the District of New
Jersey; and further agree and consent that personal service or process in any
such action or proceeding outside of the State of New Jersey and Morris County
shall be tantamount to service in person within the State of New Jersey and
Morris County and shall confer personal jurisdiction and venue upon either of
the said courts.
9. ENTIRE DOCUMENT. Each of the parties hereby covenants that this
Note is intended to and does contain and embody herein all of the understandings
and agreements, both written or oral, of the parties hereto with respect to the
subject matter of this Note, and that there exists no oral agreement or
understanding, express or implied, whereby the absolute, final and unconditional
character and nature of the Note shall be in
54
<PAGE>
any way invalidated, impaired or affected. There are no provisions affecting or
interpreting this Note other than those set forth herein.
The acceptance of any installments or payments by the Holder hereof
after the due date herein, or the waiver of any other or subsequent breach or
default may prevent the Holder hereof from immediately pursuing any or all of
his remedies.
Techscience Industries, Inc.
BY: /s/ JAMES T. WOLL
------------------------------------
James T. Woll, President
ACCEPTED:
/s/ R. SCOTT CAPUTO
- --------------------------------
R. Scott Caputo
55
EXHIBIT 10 (f) CERTIFICATE OF RESTORATION AND REVIVAL
56
<PAGE>
CERTIFICATE OF RESTORATION AND REVIVAL
OF
CERTIFICATE OF INCORPORATION
OF
TECHSCIENCE INDUSTRIES, INC.
The undersigned, the duly elected President and Secretary of Techscience
Industries, Inc. (hereinafter the "Corporation"), hereby certify as follows:
1. The name of the Corporation is Techscience Industries, Inc.
2. The Corporation was organized under the provisions of the General Corporation
Law of the State of Delaware. The date of filing of its original Certificate of
Incorporation with the Secretary of State of the State of Delaware is November
29, 1978.
3. The address, including the street, city, and country, of the registered
office of the corporation in the State of Delaware and the name of the
registered agent at such address are as follows: The United States Corporation
Company, 1013 Centre Road, in the City of Wilmington, County of New Castle,
19805-1297.
4. The Corporation hereby procures a restoration and revival of its Certificate
of Incorporation, which became inoperative by law on March 1, 1998 for failure
to file annual reports and non-payment of taxes payable to the State of
Delaware.
5. The Certificate of Incorporation of the Corporation, which provides for and
will continue to provide for, perpetual duration, shall, upon the filing of this
Certificate of Restoration and Revival of the Certificate of Incorporation in
the Department of State of the State of Delaware, be restored and revived and
shall become fully operative on February 28, 1998, or as soon thereafter as this
Certificate is duly filed with the State of Delaware.
6. This Certificate of Restoration and Revival of the Certificate of
Incorporation is filed by authority of the duly elected Board of Directors of
the Corporation as prescribed by Section 312 of the General Corporation Law of
the State of Delaware.
Signed on February 5th, 1999.
/s/ JAMES T. WOLL
----------------------------------
James T. Woll, President
57
EXHIBIT 10 (g) ACCREDITED INVESTOR SUBSCRIPTION AGREEMENT
58
<PAGE>
TECHSCIENCE INDUSTRIES, INC.
ACCREDITED INVESTOR SUBSCRIPTION AGREEMENT (the "Agreement") dated
February 19, 1999 between Techscience Industries, Inc., a Delaware corporation
with principal offices at 3 Rockaway Place, Parsippany, New Jersey 07054 (the
"Company") and the person or persons executing this Agreement on the last page
(the "Subscriber").
1. DESCRIPTION OF THE OFFERING. This Agreement sets forth the terms
under which the Subscriber will invest in the Company. This subscription is for
units comprised of 6,250 shares of the Company's common stock, $.01 par value
per share (the "Shares") offered at a price of $4.00 Share or an aggregate of
$25,000 per unit (the "Unit"). This subscription is one of 60 subscriptions for
60 Units or an aggregate of $1,500,000 if all offered Units are sold. The Shares
will be "restricted securities" as that term is defined under Rule 144 under the
Act and ineligible for public sale for a period of 12 months from the date of
issuance. The Units are being offered under and pursuant to Rule 506 of
Regulation D (the "Rule") under the Securities Act of 1933, as amended (the
"Act") for a period of 90 days business days, subject to a single extension of
30 days. This offering is being conducted solely to "Accredited Investors" as
that term is defined in Rule 501(a) of Regulation D under the Act for the
purpose of providing the working capital necessary to put the Company in the
position to implement the Company's proposed business combination with
PetPlanet.com, Inc., a non-affiliated California corporation ("PPI") wherein the
Company will acquire all of the issued and outstanding shares of PPI's common
stock, $.01 par value per share, solely in exchange for the issuance of an
aggregate of 7,325,000 shares of the Company (the "Reorganization").
2. TERMS OF THE OFFERING. The Company is offering the Units on a
strictly best efforts basis with no minimum number of Units that must be
purchased. However, and unless the Company is successful in selling a minimum of
40 Units, it will be in default under its February 10, 1999 letter of intent
with PPI, a copy of which is annexed hereto as Exhibit "A" and incorporated
herein by reference (the "LOI"), which requires the Company to have a positive
tangible net worth of at least $975,000 at the closing of the Reorganization
currently scheduled for April 1, 1999. As provided in the escrow agreement
annexed to this Agreement as Exhibit "B" and hereby incorporated herein by
reference (the "Escrow Agreement"), all Shares comprising the Units will be held
in escrow by Lester Yudenfriend, Esq., securities counsel to the Company until
the closing of the Reorganization. In the event the Reorganization does not
close on or before April 1, 1999, and unless extended in writing by the Company
and PPI, the Company will: (i) refund the Subscriber the full amount of his
investment in the Units; and (ii) restore the Shares comprising the Units to
authorized but unissued status. In the event a minimum of 250,000 Shares are
sold prior to the closing of the Reorganization, the Company may continue to
sell the remaining Shares until the expiration of the 120 day Offering period.
The Execution of this Agreement shall constitute an offer by the Subscriber to
subscribe to the Shares in the amount and on the terms specified herein. The
Company reserves
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<PAGE>
the right, in its sole discretion, to reject in whole or in part, any
subscription offer. If the Subscriber's offer is accepted, the Company will
execute a copy of this Agreement and return it to Subscriber. Upon execution of
this Agreement, the Company will instruct its transfer agent to cause the
original issuance of certificates representing the Shares and the delivery
thereof to the Subscriber at such address as she shall designate.
3. SUBSCRIPTION PAYMENT. Subscription to each Unit requires a minimum
total cash investment of $25,000. The subscription price will be payable in cash
in full on subscription.
4. THE COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company hereby
represents and warrants as follows:
(a) The Company is a corporation duly formed and in good
standing under the laws of the State of Delaware with full power and authority
to conduct its business as presently contemplated;
(b) The Company has the corporate power to execute, deliver
and perform this Agreement, the LOI and the Escrow Agreement in the time and
manner contemplated; and
(c) The Shares issuable to Subscribers have been reserved for
issuance and when issued, will be duly and validly issued, fully paid and
non-assessable with no personal liability attaching to the ownership thereof.
5. SUBSCRIBER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. The
Subscriber hereby represents, warrants and covenants as follows:
(a) The Subscriber is an entity, and is an "Accredited
Investor" as defined in Rule 501(a) of Regulation D under the Act. This
representation is based on the fact that the Subscriber is an accredited
individual who, together with the Subscriber's spouse, have a net worth of at
least $1,000,000 OR the Subscriber, individually, has had net income of not less
than $200,000 during the last two years, and reasonably anticipates that the
Subscriber will have an income of at least $200,000 during the present year and
the next year;
(b) If the Subscriber is a corporation, partnership, trust or
any unincorporated association: (i) the person executing this Subscription
Agreement does so with full right, power and authority to make this investment;
(ii) that such entity was not formed for the specific purpose of making an
investment in the Company; and (iii) that all further representations and
warranties made herein are true and correct with respect to such corporation,
partnership, trust and unincorporated association;
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(c) The address set forth below is the Subscriber's true and
correct residence, and the Subscriber has no present intention of becoming a
resident of any state or jurisdiction;
(d) The Subscriber has received and read or reviewed, is
familiar with and fully understands the due diligence material furnished by the
Company, annexed to this Agreement and comprising, inter alia: (i) a draft copy
of the Company's Form 10-KSB Annual Report for the eight fiscal years ended
October 31, 1998; (ii) audited financial statements for the five fiscal years
ended October 31, 1995; (iii) draft audited financial statements for the six
fiscal years ended October 31, 1996; (iv) the LOI; and (v) a copy of PPI's
Business Plan including three year cash flow projections and assumptions. The
Subscriber also fully understands this Agreement and the risks associated with
this offering, the Company's complete lack of operating history since 1990, and
confirms that all documents, records and books pertaining to the Subscriber's
investment in the Units and requested by the Subscriber have been made available
or delivered to the Subscriber by the Company;
(e) The Subscriber hereby specifically acknowledges and
accepts that the Subscriber is fully aware of the following HIGH RISK FACTORS:
(i) The Company is a "shell corporation" with no
operations since 1990;
(ii) The Company is presently delinquent in its
reporting obligations under the 34 Act and has been so delinquent since 1991;
(iii) Unless the Company becomes current under the 34
Act, the Subscriber will not be able to take advantage of Rule 144 under the
Act, as a means of selling the Shares;
(iv) Even if the Company is successful in becoming
current in its reporting obligations under the 34 Act, the Subscriber will be
unable to take advantage of Rule 144 under the Act, as a means of selling the
Shares until and unless the Subscriber has held the Shares for 12 months;
(v) There is currently no market for the Shares.
Although the Company intends to initiate a trading market in the shares of the
Company's common stock following the closing of the Reorganization, there can be
absolutely no assurance thereof;
(vi) There can be no assurance whatsoever that the
Company will be successful in consummating the Reorganization with PPI or that
even if the Reorganization is completed, that PPI will be successful in
implementing its proposed Internet based business plan;
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(vii) Even if the Reorganization is completed, there
can be no assurance that PPI, a development stage company without income from
operations, will be successful in implementing its proposed Internet business
plan without the need for additional capital to satisfy its projected working
capital needs through the next 12 months. The failure of PPI to raise the
requisite capital may have a material adverse effect upon the value of the
Shares and its ability to remain in business.
(viii) As of the closing of the Reorganization and
the Company's acquisition of PPI, the Company will succeed to the business of
PPI. PPI must be considered as a start up company. A purchaser of the Shares
should be aware of the difficulties, delays and expenses normally encountered by
a start up operation. Furthermore, there can be no assurance that PPI's proposed
Internet business plans as described in the exhibits annexed hereto will either
materialize or prove successful. Accordingly, there can be no assurance that PPI
will ever operate profitably.
(ix) For all of the reasons set forth above, the
Subscriber should be prepared to lose his entire investment in the Units.
(f) The Subscriber has had an opportunity to ask questions of
and receive answers from the Company or a person or persons acting on its
behalf, concerning the terms and conditions of this investment and confirms that
all documents, records and books pertaining to the investment in the Units and
requested by the Subscriber has been made available or delivered to the
Subscriber;
(g) The Subscriber will be acquiring the Shares solely for the
Subscriber's own account, for investment and are not with a view to or for the
resale, distribution, subdivision or fractionalization thereof; and the
Subscriber has no present plans to enter into any such contract, undertaking,
agreement or arrangement;
(h) The funds tendered to the Company in payment of the Units
subscribed for hereby belong to the Subscriber, and no other individual or
entity has any interest in such funds. Furthermore, and regardless of the nature
of such funds (i.e., whether in cash, personal, cashiers, bank or certified
check) the same represent legal income of the Subscriber;
(i) The Subscriber understands that the Shares must be held
for a minimum of 12 months prior to any public sale thereof;
(j) The Subscriber understands that the Company is under no
obligation to register the Shares under the Act or to comply with the
requirements for any exemption which might otherwise be available, or to supply
the Subscriber with any information necessary to enable the Subscriber to make
routine sales of the Shares under Rule 144 or any other rule of the Rules and
Regulations of the Securities and Exchange Commission adopted under the Act;
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(k) The Subscriber's compliance with the terms and conditions
of this Agreement will not conflict with any instrument or agreement pertaining
to the Units or the Shares or the transactions contemplated herein; and will not
conflict in, result in a breach of, or constitute a default under any instrument
to which the Subscriber is a party or the Units or the Shares is the subject;
(l) The Subscriber will seek his own legal and tax advice
concerning tax implications attendant upon the purchase of the Units and
understands and accepts that the Company is relying upon this representation
insofar as disclosure of tax matters is concerned;
(m) The Subscriber hereby acknowledges and represents that the
Subscriber is aware of the following:
(i) The Units are speculative investments which
involve a high degree of risk; and
(ii) The closing of the Reorganization is
specifically conditioned upon the Company satisfying all of the conditions
precedent set forth in the LOI including the preparation of audited financial
statement, the filing of all delinquent 34 Act filings, and the sale of all of
the Units by April 1, 1999. There can be no assurance that the Company will be
able to satisfy the conditions precedent by April 1, 1999.
The foregoing representations and warranties are true and accurate as
of the date hereof and shall be true and accurate as of the date of delivery of
the subscription to the Company and shall survive such delivery. If, in any
respect, such representations and warranties shall not be true and accurate, the
Subscriber shall give written notice of such fact to the Company, specifying
which representations and warranties are not true and accurate and the reasons
therefor.
6. RESPONSIBILITY. The Company or its officers and directors shall not
be liable, responsible or accountable in damages or otherwise to Subscriber for
any act or omission performed or omitted by them in good faith and in a manner
reasonably believed by them to be within the scope of the authority granted to
them by this Agreement and in the best interests of the Company provided they
were not guilty of gross negligence, willful or wanton misconduct, fraud, bad
faith or any other breach of fiduciary duty with respect to such acts or
omissions.
7. MISCELLANEOUS.
(a) This Agreement shall be deemed to have been made in and
shall be governed by and interpreted under and construed in all respects in
accordance with the laws of the State of New Jersey, irrespective of the place
of domicile or residence of any party. In the event of a controversy arising out
of the interpretation, construction, performance or breach of this Agreement,
the Company and the Subscriber hereby agree
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and consent to the jurisdiction and venue of the Superior Court of the State of
New Jersey, Morris County and/or the United States District Court for the
District of New Jersey; and further agree and consent that personal service or
process in any such action or proceeding outside of the State of New Jersey and
Morris County shall be tantamount to service in person within the State of New
Jersey and Morris County and shall confer personal jurisdiction and venue upon
either of the said courts.
(b) The Company and the Subscriber hereby covenant that this
Agreement is intended to and does contain and embody herein all of the
understandings and Agreements, both written or oral, of the Company and the
Subscriber with respect to the subject matter of this Agreement, and that there
exists no oral agreement or understanding, express or implied liability, whereby
the absolute, final and unconditional character and nature of this Agreement
shall be in any way invalidated, empowered or affected. There are no
representations, warranties or covenants other than those set forth herein.
(c) The headings of this Agreement are for convenient
reference only and they shall not limit or otherwise affect the interpretation
or effect of any terms or provisions hereof.
(d) This Agreement shall not be changed or terminated orally
except as set forth herein. All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by and
against the successors and assigns of the Company and the heirs, executors,
administrators and assigns of the Subscriber.
(e) In addition to the investment representations made by the
Subscriber in Paragraph 5 of this Agreement, the Subscriber hereby agrees that
simultaneously with the execution of this Agreement, he will execute and deliver
to the Company the form of Investment Letter attached hereto. The Subscriber
hereby consents to the issuance by the Company of a stop transfer order against
any and all certificates representing the Shares on the books and records of the
Company and/or its transfer agent.
(f) A modification or waiver of any of the provisions of this
Agreement shall be effective only if made in writing and executed with the same
formality as this Agreement. The failure of either the Company or the Subscriber
to insist upon strict performance of any of the provisions of this Agreement
shall not be construed as a waiver of any subsequent default of the same or
similar nature, or of any other nature or kind.
8. BLUE SKY STATEMENTS.
(a) FOR NEW YORK RESIDENTS ONLY. The Subscriber agrees that
this Unit (or Shares) is being purchased for my own account for investment, and
not for distribution or resale to others. The Subscriber represents that the
Subscriber has adequate means of providing for the Subscriber's current needs
and possible personal contingencies, and that the Subscriber has no need for
liquidity of this investment.
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It is understood that all documents, records and books pertaining to
this investment have been made available for inspection by the Subscriber and/or
any representative thereof, and that the books and records of the Company will
be available upon reasonable notice, for inspection by Subscriber during
reasonable business hours at the Company's principal place of business. The
Attorney General of the State of New York does not pass upon or endorse the
merits of this or any private offering. Any representation to the contrary is
unlawful.
(b) FOR NEW JERSEY RESIDENTS ONLY. The Subscriber hereby
acknowledges to the New Jersey Bureau of Securities (the "Bureau") that the
Subscriber intends to purchase the Units in the Company on or before the
Termination Date. The Subscriber further acknowledges that the Subscriber is
aware that the Units are not registered with the Bureau and that the Bureau has
not passed upon or endorsed the merits of this offering.
The Subscriber warrants to the Bureau that the Subscriber shall not
promote, offer for sale, sell or otherwise transfer the securities at any time
unless they are registered with or expressly exempt from registration by the
Bureau.
THE SUBSCRIBER HEREBY REPRESENTS, WARRANTS, AGREES AND ACKNOWLEDGES
THAT THE SUBSCRIBER HAS RECEIVED, READ, UNDERSTOOD AND IS FAMILIAR WITH THE
RISKS ASSOCIATED WITH THE SUBSCRIBER'S INVESTMENT IN THE COMPANY AS SET FORTH IN
THIS AGREEMENT AND THE OFFERING PURSUANT TO WHICH THIS SUBSCRIPTION IS BEING
MADE. THE SUBSCRIBER FURTHER ACKNOWLEDGES THAT, EXCEPT AS SET FORTH IN THIS
AGREEMENT, NO REPRESENTATIONS OR WARRANTIES HAVE BEEN MADE TO IT, OR TO ITS
ADVISORS, BY THE COMPANY, OR BY ANY PERSON ACTING ON BEHALF OF THE COMPANY, WITH
RESPECT TO THE SHARES, THE PROPOSED BUSINESS OF THE COMPANY, THE DEDUCTIBILITY
OF ANY ITEM FOR TAX PURPOSES, AND/OR THE ECONOMIC, TAX, OR ANY OTHER ASPECTS OR
CONSEQUENCES OF A PURCHASE OF A UNIT AND/OR ANY INVESTMENT IN THE COMPANY, AND
THAT IT HAS NOT RELIED UPON ANY INFORMATION CONCERNING THE OFFERING, WRITTEN OR
ORAL, OTHER THAN THAT CONTAINED IN THIS AGREEMENT.
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9. APPLICATION FOR INDIVIDUAL SUBSCRIBERS. The Subscriber hereby offers
to purchase and subscribe to _____ Units and encloses payment of $25,000 per
Unit or an aggregate investment of $___________.
SIGNATURE PAGE
For Individuals
----------------------------------------
Signature of Individual Subscriber
----------------------------------------
Name of Individual Subscriber
----------------------------------------
(Print) Street Address - Residence
----------------------------------------
(Print) City, State and Zip Code
Social Security Number:
----------------------------------------
AGREED TO AND ACCEPTED:
As of April 12, 1999
TECHSCIENCE INDUSTRIES, INC.
BY: /s/ JAMES T. WOLL
-------------------------------------
James T. Woll, President
BY: /s/ JAMES T. WOLL
-------------------------------------
James T. Woll, President
66
EXHIBIT 10 (H) MAJORITY CONSENT
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WRITTEN CONSENT TO ACTION BY THE
BOARD OF DIRECTORS AND
A MAJORITY OF THE STOCKHOLDERS
OF TECHSCIENCE INDUSTRIES, INC.
THE UNDERSIGNED, being all of the directors and the holders of 6,771,250 of the
10,000,000 issued and outstanding shares of common stock, $.01 par value per
share of Techscience Industries, Inc., a corporation organized and operating
under the laws of the State of Delaware (the "Corporation"), representing a
majority of the Corporation's issued and outstanding common stock
capitalization, pursuant to the permissive provisions of Section 228(a) and
228(c) of the General Corporation Law of the State of Delaware, and in
accordance with the requirements of the Corporation's Certificate of
Incorporation and By-Laws, hereby take the following actions and adopt the
following resolutions:
RESOLVED, that the Board of Directors of the Corporation be,
and the same hereby is authorized, empowered and directed in
the name and on behalf of the Corporation and under its
corporate seal and otherwise, and without further vote or
action by the stockholders of the Corporation, to take any
and all such action as such directors, in the exercise of
their considered business judgement, deem reasonable and
necessary to negotiate and consummate a multi faceted
business combination with PetPlanet.com, Inc., a
non-affiliated California corporation ("Pet") and
encompassing: (a) an amendment to the Corporation's
Certificate of Incorporation to effectuate: (i) an increase
in the number of shares of common stock, $.01 par value per
share (the "Shares"), which the Corporation is authorized to
issue from 10,000,000 to 20,000,000 (the "Increase"); (ii) a
four for twenty-five reverse split of all issued and
outstanding Shares (the "Reverse Split"); (iii) the creation
of an authorized class of 2,000,000 shares of Preferred
Stock, $.01 par value per share (the "Preferred Stock") and
the granting to the Corporation's Board of Directors the
authority, without further action by the stockholders of the
Corporation to provide for the issuance of the shares of
Preferred Stock in series, to establish from time to time the
number of shares to be included in each such series, and to
fix the designation, powers, preferences and rights of the
shares of each such series and the qualifications,
limitations or restrictions thereof; and (iv) a change of the
name of the Corporation to PetPlanet.com, Inc. (the "Name
Change"); (b) a private placement under Rule 506 of
Regulation D under the Securities Act of 1933, as amended
(the "Act") of an aggregate of 400,000 post Reverse Split
Shares at $.062 per Share, which Shares shall be restricted
for 30 months(the "Seed Money Private Offering"); (c) a
private placement under Rule 506 of Regulation D under the
Act of an aggregate of 250,000 post Reverse Split Shares at
$4.00 per Share, which Shares shall be restricted for 12
months (the "Private Offering"); (d) an amendment to the
Corporation's 1984 Incentive Stock Option Plan creating the
1999 Long Term Incentive Plan (the "1999 Plan") wherein an
aggregate of 2,000,000 Post Reverse Split Shares are reserved
for issuance of option under the 1999 Plan; and (e) the
acquisition of all of the issued and
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outstanding shares of Pet's common stock, $.01 par value per
share, solely in exchange for the issuance of an aggregate of
7,325,000 post Reverse Split Shares (the "Reorganization").
The Increase, the Reverse Split, the Preferred Stock, the
Name Change, the Seed Money Private Offering, the Private
Offering, the 1999 Plan and the Reorganization are
hereinafter collectively referred to as the "Business
Combination". As of the closing date of the Business
Combination, the Corporation shall have an authorized
capitalization of 20,000,000 Shares and 2,000,000 shares of
Preferred Stock of which 9,575,000 Shares and no shares of
Preferred Stock shall be issued and outstanding; and it was
FURTHER RESOLVED, that the Certificate of Incorporation of
this Corporation be amended to effectuate the following
changes:
1. To amend Article Fourth thereof, so that the said
Article shall be and read as follows:
"FOURTH: The aggregate number of shares which the
Corporation shall have authority to issue is
Twenty Million (20,000,000) shares of Common Stock
all of which are of the same class and which have
a par value of $.01 per share; and Two Million
(2,000,000) shares of Preferred Stock, $.01 par
value per share;"
2. To add a new Article Fifth thereof, so that the
said Article shall be and read as follows:
"FIFTH: The Board of Directors is authorized,
subject to limitations prescribed by law and the
provisions of Article Fourth, to provide for the
issuance of the shares of Preferred Stock in
series, and by filing a certificate pursuant to
the applicable law of the State of Delaware, to
establish from time to time the number of shares
to be included in each such series, and to fix the
designation, powers, preferences and rights of the
shares of each such series and the qualifications,
limitations or restrictions thereof. The authority
of the Board with respect to each series shall
include, but not be limited to, determination of
the following: (a) The number of shares
constituting that series and the distinctive
designation of that series; (b) The dividend rate
on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date
or dates, and the relative rights of priority, if
any, of payment of dividends on shares of that
series; (c) Whether that series shall have voting
rights, in
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addition to the voting rights provided by law,
and, if so, the terms of such voting rights; (d)
Whether that series shall have conversion
privileges, and, if so, the terms and conditions
of such conversion, including provision for
adjustment of the conversion rate in such events
as the Board of Directors shall determine; (e)
Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions
of such redemption, including the date or dates
upon or after which they shall be redeemable, and
the amount per share payable in case of
redemption, which terms, conditions, amounts and
dates may vary from time to time; (f) Whether that
series shall have a sinking fund for the
redemption or purchase of shares of that series,
and, if so, the terms and amount of such sinking
fund; (g) The rights of the shares of that series
in the event of voluntary or involuntary
liquidation, dissolution or winding up of the
corporation, and the relative rights of priority,
if any, of payment of shares of that series; and
(h) Any other relative rights, preferences and
limitations of that series."
3. To add a new Article "Sixth" thereof so that the
said Article shall be and read as follows:
"SIXTH: The Board of Directors of the Corporation
shall have the right without the further vote of
the Corporation's stockholders and without further
notice thereto, to consummate a reverse split on
up to a four for twenty-five basis, of all issued
and outstanding shares of the Corporation's Common
Stock, $.01 par value per share, held by
stockholders on the date the Board of Directors
declares such reverse split to be effective
thereby decreasing the number of issued and
outstanding shares accordingly, and that, in the
event fractional shares result therefrom, the
holders thereof not be paid any sum in cash but in
lieu thereof the Corporation shall round out the
number of shares issued to the nearest higher
whole share."; and it was
FURTHER RESOLVED, that James T. Woll, Gary W. Gill and James
S. Gallo be and the same hereby are duly nominated and
elected as directors of the Corporation to serve until the
closing of the Business Combination or until their respective
successors shall have been elected; and it was
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FURTHER RESOLVED, that James T. Woll be and he hereby is duly
nominated and elected as President and Chief Executive
Officer of the Corporation to serve until the closing of the
Business Combination or until his respective successor shall
have been elected and Gary W. Gill; be and he hereby is duly
nominated and elected as Treasurer and Chief Financial
Officer of the Corporation to serve until the closing of the
Business Combination or until his respective successor shall
have been elected; and it was
FURTHER RESOLVED, that Wiss & Co. be and the same hereby is
selected as independent certified public accountants to
examine and audit the financial statements of the Corporation
for the two fiscal years ended October 31, 1998; and it was
FURTHER RESOLVED, that the acts and actions of management
since the last annual meeting of the Board of Directors of
the Corporation be, and the same hereby are ratified,
confirmed and adopted as being in the best interests of the
Corporation and its stockholders; and it was
FURTHER RESOLVED, that the proper officers of the Corporation
be, and they hereby are, authorized, empowered and directed,
in the name and on behalf of the Corporation and under its
corporate seal and otherwise, and without further vote or
action by the stockholders of the Corporation, and in any
such manner as such officers shall deem reasonable and
prudent and in the best interests of the Corporation and its
stockholders to execute such documents as are reasonably
deemed necessary to implement the Business Combination and to
give effect to the transactions addressed by this Shareholder
Consent.
By virtue of the foregoing and following the mailing to all non-consenting
shareholders of the Corporation of a written notice summarizing the action taken
by this consent, the Corporation will file a Certificate of Amendment to the
certificate of Incorporation of the Corporation with the State of Delaware
implementing the Reverse Split and change of name and thereafter consummating
the Business Combination.
IN WITNESS WHEREOF, this Certificate of Consent has been duly executed and shall
be deemed to be effective as of the th day of February, 1999.
- ------------------------------------ ---------------------------------
James T. Woll, Director Gary W. Gill, Director
- ------------------------------------ ---------------------------------
James S. Gallo, Director Jean Appello (900,000 Shares)
- ------------------------------------ ---------------------------------
Anthony Bertuzzi (1,736,200 Shares) Judy Cabrera (750,000 Shares)
- ------------------------------------ ---------------------------------
James T. Patten (875,000 Shares) Joyce Cohen (700,000 Shares)
- ------------------------------------ ---------------------------------
Ellen Rosenberg (1,127,800 Shares) James T. Woll (100,000 Shares)
- ------------------------------------ ---------------------------------
Gary W. Gill (100,000 Shares) James S. Gallo (100,000 Shares)
- ------------------------------------ ---------------------------------
William P. Bennett (100,000 Shares) Jay Dersahagin (100,000 Shares)
- ------------------------------------
Kent Mayberry (182,250 Shares)
71
EXHIBIT 10 (I) BRIDGE LOAN AGREEMENT
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BRIDGE LOAN AGREEMENT dated this 3rd day of March 1999, by and between
Techscience Industries, Inc., a Delaware corporation with principal offices at 3
Rockaway Place, Parsippany, New Jersey 07054 ("TSCI") and PetPlanet.com, Inc., a
privately owned California corporation with offices at 438 Boynton Avenue, Suite
100, Berkeley, California 94707 ("PPI"). TSCI and PPI are hereinafter
collectively referred to as the "Parties".
W I T N E S S E T H:
WHEREAS, the Parties have entered into a written Letter of Intent dated February
10, (the "LOI"); and
WHEREAS, the LOI contemplates the acquisition by TSCI of all of the issued and
outstanding shares of PPI's common stock, no par value per share from the
individual stock, warrant and option holders thereof solely in exchange for an
aggregate of 7,325,000 authorized but unissued shares of TSCI's common stock,
$.001 par value per (the "Reorganization"); and
WHEREAS, in anticipation of the closing of the Reorganization, PPI desires to
borrow funds from TSCI for the purpose of fostering and expediting the
development of PPI's business; and
WHEREAS, the TSCI is willing to solicit funds from individual investors (the
"Bridge Loan Lenders") and thereafter lend capital to PPI on the terms and
subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements herein contained, the Parties agree as follows:
1. THE BRIDGE LOAN.
1.1 THE BRIDGE LOAN. TSCI hereby lends to PPI and PPI hereby
accepts from TSCI the sum of One Hundred and Fifty Thousand and 00/100
($150,000) Dollars (the ABridge Loan"). The Bridge Loan shall be evidenced by a
secured, convertible promissory note in the form annexed hereto as Exhibit "A"
and hereby incorporated herein by reference (the "Note"). At the closing of the
Bridge Loan which shall take place via facsimile and overnight package delivery
service not later than March 3, 1999 (the "Closing"), PPI shall deliver to TSCI
a duly executed copy of the Note. The Bridge Loan proceeds shall be evidenced by
a Federal wire transfer effectuated at the Closing to such bank account as PPI
shall have advised TSCI in writing at least 24 hours prior to the Closing, or by
TSCI's business check payable to the order of PPI and delivered to PPI at the
Closing.
1.2 INTEREST RATE. PPI hereby agrees to pay to TSCI and TSCI
hereby accepts as interest on the Bridge Loan an amount equal to ten (10%)
percent per annum. Interest shall be computed on the basis of a year of 360 days
and actual days elapsed and
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shall be payable in one lump sum on the Due Date of the Bridge Loan (as that
term is hereinafter defined).
1.3 TERM OF AGREEMENT. This Agreement shall be in effect until
the earlier of the full repayment of the Bridge Loan or the closing of the
Reorganization (the "Expiration Date"). In the event the Reorganization does not
close solely because of the failure of TSCI to have a net worth of $975,000, the
term of this Agreement shall be automatically extended to the earlier of the
closing date of the first equity or debt financing consummated by PPI or October
1, 1999 (the "Extended Date"). This Agreement may be terminated by TSCI upon the
occurrence of a Default as provided in Section 7.1 of this Agreement. Upon
either the effective date of termination, the Expiration Date or the Extended
Date, the entire unpaid principal amount of the Bridge Loan shall become
immediately due and payable without further notice or demand. Notwithstanding
any termination, and until all sums due hereunder shall have been paid and
satisfied, PPI shall continue to pay interest to TSCI as provided in Section 1.2
of this Agreement, and TSCI shall be entitled to retain its first lien and
security interest in the Collateral (as that term is hereinafter defined).
2. UTILIZATION OF THE BRIDGE LOAN
PPI hereby acknowledges and accepts that the Bridge Loan shall only be utilized
for working capital or other corporate purposes as set forth in PPI's business
plan as delivered to TSCI in February 1999.
3. COLLATERAL.
3.1 SECURITY INTEREST -FIRST LIEN. To secure the prompt
payment to TSCI of the interest and principal on the Bridge Loan, PPI hereby
grants to TSCI and/or to the Bridge Loan Lenders and TSCI hereby accepts, a
continuing first lien and security interest (the "First Lien") in and to: (i)
such number of authorized but unissued shares of PPI's common stock, no par
value per share, as shall, when added to the number of issued and outstanding
shares, shall equal fifty one (51%) percent of PPI's total issued and
outstanding common stock capitalization (the "Collateral Shares"); (ii) the
right and title to PPI's PetPlanet.com domain name, website, website software
and any and all copyrights, trademarks, servicemarks owned by PPI or acquired by
PPI after the date of this Agreement; and (iii) any and all inventory, accounts
receivable or other tangible or intangible assets acquired by PPI after the date
of this Agreement (hereinafter collectively referred to as the "Collateral").
The Collateral shall not represent the sole and exclusive collateral for the
Bridge Loan against which TSCI may seek redress. At the Closing, PPI shall agree
to hold a certificate representing the Collateral Shares in escrow for the
benefit of TSCI.
3.2 DISCLOSURE OF SECURITY INTEREST. PPI shall make
appropriate entries upon its financial statements and books and records
disclosing TSCI's First Lien in the Collateral.
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3.3 SECURITY DOCUMENTS. At TSCI's request, PPI shall execute
and/or deliver to TSCI and/or to the Bridge Loan Lenders, at any time or times
hereafter, all security documents including but not limited to UCC-1 financing
statements that TSCI and/or to the Bridge Loan Lenders may reasonably request,
to evidence TSCI's and/or to the Bridge Loan Lender's security interest in the
Collateral. Upon the occurrence of a Default, PPI hereby irrevocably makes,
constitutes and appoints TSCI and/or to the Bridge Loan Lenders as PPI's true
and lawful attorney (and agent-in-fact) to sign the name of PPI on any security
documents evidencing the First Lien and to deliver any of the security documents
to such persons as TSCI and/or to the Bridge Loan Lenders, in its or their
discretion, may elect. PPI hereby specifically agrees and consents that a
carbon, photographic, photostatic, or other reproduction of this Agreement or of
a financing statement shall be and be deemed to be the legal equivalent of a
financing statement and may be filed with any county clerk as evidence of TSCI's
and/or to the Bridge Loan Lender's security interest in the Collateral.
3.4 PRIORITY. PPI hereby represents and warrants that the
First Lien has and shall have priority over any and all claims in and to the
Collateral that now exist or may hereinafter arise.
3.5 COVENANTS AS ADDITIONAL COLLATERAL. Commencing on the date
of this Agreement and continuing through the closing date of the Reorganization,
PPI covenants and agrees that the Standstill and Management Restrictions
contained in Sections 8 and 11 of the LOI shall remain in full force and effect.
As additional Collateral for the Bridge Loan, and only In the event the
Reorganization does not close solely because of the failure of TSCI to have a
net worth of $975,000, PPI hereby covenants and agrees with TSCI and/or the
individual Bridge Loan Lenders that PPI will give TSCI prior written notice of
its intention to consummate any of the following courses of action and will
either utilize the first $150,000 in proceeds from any such action to repay the
Bridge Loan or, if PPI receives securities of another entity, it will offer the
Bridge Loan Lenders the right to receive $150,000 worth of such securities:
(i) solicit or encourage any offer or enter into
any agreement for the sale, transfer or other disposition of any capital stock
or assets of PPI to or with any other entity or person, other than sales of
goods and services by PPI in the ordinary course of its business;
(ii) entertain or pursue any unsolicited offer for
any such sale, transfer or other disposition;
(iii) issuance of any shares of common stock for cash
or securities;
(iv) issuance of any additional classes of equity
securities or securities convertible into equity securities;
(v) make any acquisition of assets or stock of
another corporation or otherwise consummate any business combination; or
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(vi) incur any material amount of indebtedness.
4. REPAYMENT
4.1 REPAYMENT AND REPAYMENT PROCEDURE. Unless TSCI and/or to
the Bridge Loan Lenders shall have exercised the conversion privileges of the
Note, repayment of the full amount of the principal and interest due on the
Bridge Loan shall be made by PPI to TSCI on the Expiration or Extended Date
unless TSCI and/or to the Bridge Loan Lenders shall have extended the same in
writing. In the event TSCI and/or to the Bridge Loan Lenders shall have
exercised the conversion privileges of the Note, repayment of the $100,000 of
the principal and all of the interest due on the Bridge Loan shall be made by
PPI to TSCI and/or to the Bridge Loan Lenders on the Expiration or Extended Date
unless TSCI and/or to the Bridge Loan Lenders shall have extended the same in
writing.
5. REPRESENTATIONS AND WARRANTIES OF PPI.
5.1 PPI HEREBY REPRESENTS AND WARRANTS TO TSCI AS FOLLOWS:
(a) AUTHORIZATION, VALIDITY AND ENFORCEABILITY OF
THIS AGREEMENT. PPI has the power and authority (corporate and otherwise) to
execute, deliver and perform this Agreement. PPI has taken all necessary
corporate action to authorize its execution, delivery and performance of this
Agreement. This Agreement has been duly executed and delivered by PPI and
constitutes the legal, valid and binding obligation of PPI, enforceable against
PPI in accordance with its terms. The execution and performance of this
Agreement will not result in a breach of or violate the terms of any other
agreement to which PPI is a party or by which the Collateral may be bound or
affected;
(b) ORGANIZATION AND QUALIFICATIONS. PPI (i) is duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (ii) is qualified to do business and is in good
standing in every jurisdiction where the failure to be so qualified and in good
standing would have a Material Adverse Effect and (iii) has all requisite
corporate power and authority to conduct its business and to own its property as
currently owned and conducted;
(c) OWNERSHIP OF THE COLLATERAL. PPI owns the
Collateral free and clear of any and all liens, claims or encumbrances of any
nature or description. The Collateral Shares when delivered to the Escrowee will
be duly and validly issued, fully paid and non-assessable with no personal
liability attaching to the ownership thereof;
(d) CONSENTS AND APPROVALS. No consent, approval,
authorization, license or order of, registration or filing with, or notice to,
any federal, state, local, foreign or other court, administrative agency or
commission, other governmental authority or regulatory body is necessary to be
obtained, made or given by PPI in connection with the
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execution, delivery and performance by PPI of this Agreement or the consummation
by PPI of the transactions contemplated hereunder;
(e) BROKERS. Neither PPI, nor its officers, directors
nor any of their affiliates have engaged, consented to, or authorized any
broker, finder, investment banker or other third party to act on its behalf,
directly or indirectly, as a broker or finder in connection with the
transactions contemplated by this Agreement. PPI hereby indemnifies and holds
TSCI harmless from any and all liability arising out of the claim by any
individual, firm or entity to compensation as a finder or broker in connection
with the transaction represented by this Agreement;
(f) DISCLOSURE. No representation or warranty by PPI
contained in this Agreement and no statement contained in any certificate, list,
exhibit, or other instrument specified in this Agreement, contains or will
contain any untrue statement of a material fact or omits or will omit a material
fact necessary to make the statements contained herein, in light of the
circumstances in which they are made, not misleading;
(g) LITIGATION AND OTHER CLAIMS. There are no
actions, suits or proceedings now pending or threatened which may impair PPI's
ability to perform this Agreement. PPI is not a party to an agreement in
settlement or compromise any suit or cause of action, instituted or threatened,
which may impair PPI's ability to perform this Agreement or which may adversely
affect the Collateral; and
(h) RESERVATION FOR ISSUANCE. PPI will reserve an
aggregate of 100,000 shares of its common stock, no par value per share, for
issuance to TSCI upon TSCI's exercise of the conversion privileges of the Note.
6. REPRESENTATIONS AND WARRANTIES OF TSCI
6.1 CONSENTS. No consents of governmental and other regulatory
agencies, foreign or domestic, or of other parties are required to be received
by or on the part of TSCI to enable him to enter into and carry out this
Agreement in all material respects.
6.2 BINDING NATURE OF AGREEMENT. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly reviewed and approved by TSCI and no other proceedings on the part of
TSCI are necessary to authorize the execution and delivery of this Agreement and
the consummation of the transactions contemplated herein.
6.3 LITIGATION; COMPLIANCE WITH LAW. TSCI hereby warrants that
he is not aware of any litigation, pending or other, that would prohibit him
from entering into this Agreement, making the Bridge Loan or implementing the
same as provided herein.
6.4 AUTHORITY; NO BREACH. TSCI has the power and authority to
execute, deliver and perform this Agreement. TSCI has taken all necessary action
to authorize his
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execution, delivery and performance of this Agreement. This Agreement has been
duly executed and delivered by TSCI and constitutes the legal, valid and binding
obligation of TSCI, enforceable against TSCI in accordance with its terms. The
execution and performance of this Agreement will not result in a breach of or
violate the terms of any other agreement to which TSCI is a party or by which
the Bridge Loan or the Shares may be bound or affected.
6.5 BROKERS. TSCI has not engaged, consented to, or authorized
any broker, finder, investment banker or other third party to act on TSCI's
behalf, directly or indirectly, as a broker or finder in connection with the
transactions contemplated by this Agreement. TSCI hereby indemnifies and holds
PPI harmless from any and all liability arising out of the claim by any
individual, firm or entity to compensation as a finder or broker in connection
with the transaction represented by this Agreement.
7. DEFAULT: RIGHTS AND REMEDIES ON DEFAULT
7.1 DEFAULT. The occurrence of any one or more of the
following events shall constitute a Default:
(a) PPI's fails or neglects to perform, keep or
observe any material term, provision, condition or covenant contained in this
Agreement which is required to be performed, kept or observed by PPI and the
same is not cured to TSCI's reasonable satisfaction within ten (10) days after
TSCI gives PPI notice identifying such Default; or
(b) A Default shall occur, and any applicable cure
period shall have expired, under any agreement, document or instrument, other
than this Agreement, now or hereafter existing, to which PPI is a party, but
only if that default has a material adverse effect upon the Collateral or a
material adverse effect upon any of the covenants, representations or warranties
contained in this Agreement; or
(c) The Collateral or any of PPI's other assets are
attached, seized, levied upon or subjected to a writ or distress warrant, or
come within the possession of any receiver, trustee, custodian or assignee for
the benefit of creditors and the same is not cured within ten (10) days
thereafter; an application is made by any individual, firm or entity other than
TSCI for the appointment of a receiver, trustee, or custodian for the Collateral
or any of PPI's other assets and the same is not dismissed within ten (10) days
after the application therefor; or
(d) An application is made by PPI for the appointment
of a receiver, trustee or custodian for the Collateral or any of PPI's other
assets; a petition under any section or chapter of the Bankruptcy Code or any
similar law or regulation is filed by or against PPI or any guarantor of
liabilities and is not dismissed within ten (10) days after filing; PPI makes an
assignment for the benefit of its creditors or any case or proceeding is filed
by or against PPI for its dissolution, liquidation, or termination; PPI ceases
to
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conduct its business as now conducted or is enjoined, restrained or in any way
prevented by court order from conducting all or any material part of its
business affairs; or
(e) A notice of lien, levy or assessment is filed of
record with respect to all or any substantial portion of PPI's assets by the
United States, or by any state, county, municipal or other government agency, or
any taxes or debts owing to any of the foregoing become a lien or encumbrance
upon the Collateral or a material portion of PPI's assets and such lien or
encumbrance is not released within ten (10) days after its creation; or
(f) Judgement is rendered against PPI on an uninsured
claim of $10,000.00 or more and PPI fails either to commence appropriate
proceedings to appeal such judgement within the applicable appeal period or,
after such appeal is filed, PPI fails to diligently prosecute such appeal or
such appeal is denied.
7.2 ACCELERATION OF THE LIABILITIES. Upon and after the
occurrence of a Default, all of the monies due any payable under the Bridge Loan
may, at the option of TSCI and/or to the Bridge Loan Lenders and without demand,
notice, of legal process of any kind, (including without limitation notice of
acceleration, notice of intent to acceleration, notice of intent to accelerate
or notice of intent to demand), be declared, and immediately shall become due
and payable.
7.3 REMEDIES. Upon and after the occurrence of a Default, TSCI
and/or to the Bridge Loan Lenders shall have the following rights and remedies:
(a) All of the rights and remedies of a secured party
under the New Jersey Uniform Commercial Code or other applicable law with
respect to the Collateral, all of which rights and remedies shall be cumulative,
and none exclusive, to the extent permitted by law, in addition to any other
rights and remedies against the Collateral contained in this Agreement.
8. CONDITIONS TO CLOSING
8.1 MUTUAL CONDITIONS TO CLOSING. The obligation of the
Parties to otherwise perform their respective obligations hereunder shall be
subject to the satisfaction of the following mutual conditions on or prior to
the Closing:
(a) No order, decree, judgment or injunction shall
have been issued by any governmental authority of competent jurisdiction and
shall be in effect which restrains or prohibits the consummation of the Bridge
Loan and/or the issuance of the First Lien;
(b) The Parties shall have executed and delivered to
one another the Escrow Agreement and this Agreement prior to the Closing Date;
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(c) TSCI's and PPI's representations and warranties
contained herein shall be true and correct in all material respects as of the
date hereof and, except for such representations and warranties which are given
as of a specific date or as of the date hereof, as of the Closing Date as if
made on and as of the Closing Date;
(d) The Parties shall have performed in all respects
all agreements and covenants to be performed by such Party hereunder on or prior
to the Closing;
(e) All instruments, resolutions, certificates and
documents required to carry out this Agreement, or incidental thereto, and all
other relevant legal matters, shall be reasonably satisfactory in all respects
to the Parties and their respective counsel; and
(f) PPI shall have received from TSCI a duly executed
investment letter in the form annexed hereto.
8.2 CONDITIONS TO THE OBLIGATIONS OF PPI . The obligation of
PPI to execute and deliver the Note to TSCI at the Closing and to originally
issue and hold the Collateral Shares in escrow at the Closing shall (in addition
to those specified in Section 8.1) be subject to the delivery by TSCI of a check
representing the gross proceeds of the Bridge Loan on or prior to the Closing.
8.3 CONDITIONS TO THE OBLIGATIONS OF TSCI. The obligation of
TSCI to execute and perform this Agreement and to make the Bridge Loan to PPI at
the Closing shall be subject to the satisfaction of the following conditions (in
addition to those specified in Section 8.1) on or prior to the Closing:
(a) The execution and deliver to TSCI of the Note;
(b) The original issuance of the Collateral Shares
and the holding of the same in escrow by PPI; and
(c) The execution and deliver to TSCI of a UCC-1
Financing Statement evidencing the First Lien.
9. TERMINATION
9.1. TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date:
(a) by mutual agreement in writing of TSCI and PPI;
and
(b) by either TSCI or PPI by written notice to the
other Party (i) if the Closing shall not have occurred by March 5, 1999,
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to clause
(i) shall not be available to any Party whose failure to fulfill any of its
obligations under this Agreement resulted in the Closing not occurring by such
date; or (ii) if any governmental authority of competent jurisdiction shall
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have issued an injunction, decree or order or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Closing and such injunction,
decree or order, or other action shall have become final and nonappealable.
9.2 EFFECT OF TERMINATION. In the event of the termination
of this Agreement pursuant to Section 9.1, this Agreement shall thereafter
become void and have no effect, and no Party hereto shall have any liability to
the other Party hereto in respect thereof, except (i) for this Section 9.2
(solely for purposes of clause (ii) of this Section 9.2), and (ii) nothing
herein will relieve any party from liability for any breach of any of its
representations, warranties, covenants or agreements contained in this Agreement
prior to such termination.
10. MISCELLANEOUS
10.1 REPRESENTATIONS AND WARRANTIES TO SURVIVE CLOSING. All
representations and warranties contained herein or in any schedule or
certificate delivered pursuant hereto or any writing signed by the parties on
the date hereof shall survive consummation of the transactions contemplated
under this Agreement, except that each representation and warranty shall expire
on the earlier of (i) six months from the date that the Party for whose benefit
such representation or warranty is made has actual knowledge of the inaccuracy
of any representation or the breach of any warranty and (ii) the first
anniversary of the Closing Date.
10.2 ENTIRE AGREEMENT; SEVERABILITY. This Agreement contains
the entire understanding of the Parties with respect to the subject matter
hereof and thereof and supersedes all prior agreements and understandings, oral
or written with respect to such matters and any writing signed by the Parties on
the date hereof. There are no representations, warranties or covenants other
than those set forth herein. This Agreement shall be binding upon the respective
successors of the Parties. In the event that any provision of this Agreement
shall be declared unenforceable by a court of competent jurisdiction, such
provision, to the extent declared unenforceable, shall be stricken and the
remainder of this Agreement shall remain binding on the Parties hereto. However,
in the event any such provision shall be declared unenforceable due to its
scope, breadth or duration, then it shall be modified to the scope, breadth or
duration permitted by law and shall continue to be fully enforceable as so
modified.
10.3. ASSIGNMENTS; AMENDMENTS; WAIVERS. This Agreement shall
not be assignable by either Party except upon written notice of such assignment
to the other Party. This Agreement may not be modified or amended except by a
written instrument signed by authorized representatives of each Party hereto and
referring specifically to this Agreement. Any term, provision or condition of
this Agreement may be waived in writing at any time by the Party which is
entitled to the benefit thereof.
10.4. NOTIFICATION OF CERTAIN MATTERS. Each Party (the "First
Party") shall give prompt notice to the other Party of (i) the occurrence or
nonoccurrence of any event, the
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occurrence or nonoccurrence of which would be likely to cause any representation
or warranty of the First Party contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Closing and (ii) any
material failure of the First Party to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
PROVIDED, HOWEVER, that the delivery of any notice pursuant to this Section 10.4
shall not limit or otherwise affect the remedies available hereunder to the
other Party.
10.5. PUBLIC ANNOUNCEMENTS. Each Party hereto agrees that it
will not disseminate any press release or public announcement concerning the
transaction contemplated hereby to any party, without the other Party's prior
written consent which shall not be unreasonably withheld. Each Party agrees to
cause any of its advisors, whether financial, accounting, legal or otherwise,
not to disseminate any of such information to any other party without the other
Party's prior written consent which shall not be unreasonably withheld.
10.6. NOTICES. Unless otherwise specifically provided for
elsewhere in this Agreement, any notices and other communications required to be
given pursuant to this Agreement shall be in writing and shall be effective upon
delivery by hand, overnight package delivery service or upon receipt if sent by
mail (registered or certified mail, postage prepared, return receipt requested)
or upon transmission if sent by telex or facsimile (with request for
confirmation of receipt in a manner customary for communications of such
respective type), except that if notice is received by telex or facsimile after
5:00 P.M. local time on a business day at the place of receipt, it shall be
effective as of the following business day. Notices are to be addressed to the
Parties at the address first listed above or to such other respective addresses
as either PPI or TSCI shall designate to the other by notice in writing,
provided that notice of a change of address shall be effective only upon
receipt.
10.7 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, which together shall be considered one and the same agreement
and each of which shall be deemed an original.
10.8 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement
shall be deemed to have been made, executed and delivered in, and shall be
governed by and interpreted under and construed in all respects in accordance
with the laws of the State of New Jersey, irrespective of the place of domicile
or residence of any Party. In the event of a controversy arising out of the
interpretation, construction, performance or breach of this Agreement, the
Parties hereby agree and consent to the jurisdiction and venue of the Superior
Court of the State of New Jersey, Morris County and/or the United States
District Court for the District of New Jersey; and further agree and consent
that service or process by mail or overnight package delivery service in any
such action or proceeding outside of the State of New Jersey and Morris County
shall be tantamount to service in person within the State of New Jersey and
Morris County and shall confer personal jurisdiction and venue upon either of
the said courts.
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10.9. NO THIRD PARTY BENEFICIARIES. This Agreement is for the
benefit of the parties hereto and is not intended to confer upon any other
Person any rights or remedies hereunder.
10.10 SPECIFIC PERFORMANCE. Each of the parties hereto agrees
that any breach by it of any provision of this Agreement would irreparably
injure the other party and that money damages would be an inadequate remedy
therefor. Accordingly, each of the parties hereto agrees that the other shall be
entitled to one or more injunctions enjoining any such breach or requiring
specific performance of this Agreement and consents to the entry thereof, this
being in addition to any other remedy to which the non-breaching party is
entitled at law or equity.
10.11 CAPTIONS, GENDER. The captions herein are included for
convenience of reference and shall be ignored in the construction or
interpretation hereof. Gender, tense, singular(ity) and plural(ity) shall be
read and construed in the context required by grammar, syntax, common sense and
the intent of the parties.
IN WITNESS WHEREOF, each of the Parties has executed this Agreement on the date
first written above.
PetPlanet.com, Inc
By: /s/ STEVEN E. MARDER
-------------------------------------
Steven E. Marder, President
Techscience Industries, Inc.
BY: /s/ JAMES T. WOLL
-------------------------------------
James T. Woll, President
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EXHIBIT "A"
10% SECURED CONVERTIBLE PROMISSORY NOTE
March 1, 1999 $150,000
FOR VALUE RECEIVED, PetPlanet.com, Inc., a privately owned California
corporation with offices at 438 Boynton Avenue, Suite 100, Berkeley, California
94707(hereinafter referred to as the "Maker") promises to pay to the order of
Techscience Industries, Inc., a Delaware corporation with principal offices at 3
Rockaway Place, Parsippany, New Jersey 07054 and/or and/or to the Bridge Loan
Lenders, as that term is defined in a Bridge Loan Agreement between the Maker
and the Holder dated March 3, 1999 (the "Bridge Agreement"), to which this Note
is attached as an exhibit (hereinafter collectively referred to as the "Holder")
in lawful money of the United States of America, the principal sum of One
Hundred Fifty Thousand and 00/100 ($150,000) Dollars with interest at a rate of
ten (10%) percent per annum.
1. PAYMENTS.
a. INTEREST. An interest payment of One Thousand Two Hundred
and Fifty and 00/100 ($1,250) Dollars shall be payable per month for each month
this promissory note (the "Note") remains unpaid. All accrued interest shall be
paid on either April 1, 1999 or such later date as shall be mutually agreed upon
by the Maker and the Holder or the closing date of the Reorganization (as that
term is defined in the Bridge Loan Agreement, whichever sooner occurs (the "Due
Date"). In the event that the required interest payment shall not be paid when
due, and shall remain unpaid for a period of five business (5) days or more,
then a late charge of two (2%) percent shall be due and owing for each month or
any portion thereof that such payment shall remain unpaid. In the event the
Reorganization does not close solely because of the failure of the Holder to
have a net worth of $975,000, the Due Date of this note shall automatically
extended to the earlier of the closing date of the first equity or debt
financing consummated by PPI or October 1, 1999 (the "Extended Due Date").
b. PRINCIPAL. Payment of the full principal amount due under
this Note shall be made on the Due Date or the Extended Due Date. In the event
that the principal shall not be paid on the Due Date, and shall remain unpaid
for a period of five business (5) days or more, then a late charge of two (2%)
percent shall be due and owing for each month or any portion thereof that such
payment shall remain unpaid.
2. EVENTS OF DEFAULT. The Maker shall be in default hereunder if: (a)
The Maker shall fail to pay interest on this Note when due and the failure shall
continue for a period of five (5) days after notice of such default has been
received from the Holder; or; (b) a Default as defined in Section 7 of the
Bridge Agreement.
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3. CONVERSION OPTION.
a. The Holder shall have the right, at the Holder's option, to
convert an aggregate of Fifty Thousand ($50,000) Dollars of the principal due
and payable on this Note into fully paid and non-assessable but unregistered
(i.e. restricted) shares of the Maker's common stock, no par value per share
(the "Convertible Shares") on the basis of one Convertible Share for each $.50
in amount of principal due and owing on this Note as of the date of conversion,
up to a maximum of 100,000 Convertible Shares if the entire $50,000 amount of
principal is converted. In the event the Maker shall have closed the
Reorganization when the Holder exercises its conversion privilege, the Maker
shall deliver to the Holder an aggregate of 100,000 shares of the Holder's
common stock, $.01 par value per share received by the Maker from the Holder in
the Reorganization (the "New Convertible Shares").
b. On presentation to the Maker of a duly executed Notice of
Conversion in the form annexed hereto as Exhibit "A" together with this Note,
the Holder shall be entitled, subject to the limitations herein contained, to
receive in exchange therefor a certificate or certificates for 100,000 fully
paid and non-assessable Convertible Shares or New Convertible Shares. At the
closing referenced in the Notice of Conversion (the "Closing"), the Maker shall
deliver a certificate or certificates representing the Convertible Shares or New
Convertible Shares against the Holder's delivery of the original executed copy
of this Note, which shall thereafter be and be deemed to be null and void and
paid in full to the extent of the Holder's conversion. In the event the Holder
converts less than the full $50,000 in principal into Convertible Shares or New
Convertible Shares, the Maker shall deliver a new Note to the Holder in the
unpaid principal amount. The Maker shall deliver certificated representing the
Convertible Shares or New Convertible Shares registered such name or names as
the Holder shall specify in writing to the Maker.
c. This Note shall be deemed to have been converted and the
person converting the same to have become the holder of record of Convertible
Shares or New Convertible Shares, for the purpose of receiving dividends and for
all other purposes whatever as of the date when the Notice of Conversion and
this Note are surrendered to the Maker as aforesaid. The Maker shall be required
to make any such conversion, and the surrender of this Note shall be effective
for such purpose, regardless of whether the books for the transfer of any class
of stock of the Maker are closed for any purpose.
d. The Maker shall, so long as any portion of the principal
amount of this Note shall remain unpaid, reserve and keep available solely for
the purpose of effecting the conversion of this Note, such number of Convertible
Shares or New Convertible Shares as shall from time to time be sufficient to
effect the conversion of the unpaid convertible principal balance of this Note.
e. The Maker shall pay any and all taxes which may be imposed
upon it with respect to the issuance and delivery of the Convertible Shares or
New Convertible Shares upon the conversion of this Note as herein provided. Upon
any conversion of this Note, as herein provided, no adjustment or allowance
shall be made for accumulated dividends on the Convertible Shares or New
Convertible Shares. All rights to dividends, if any, shall
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commence as of the date of Notice of Conversion, and nothing in this sentence
shall be deemed to impose upon the Maker any obligation to pay any dividends
which shall theretofore be declared and shall be payable to holders of
Convertible Shares or New Convertible Shares, of record as of a date prior to
such conversion even though the payment date for such dividend is subsequent to
the date of conversion.
4. INVESTMENT REPRESENTATIONS. The Holder has been advised, and by the
acceptance of this Note, agree and acknowledges that none of the Convertible
Shares or New Convertible Shares issuable upon conversion of this Note shall
have been registered under the Securities Act of 1933, as amended (the "Act") or
under any state securities law; and that in including the conversion option in
this Note, the Maker is relying upon an exemption from registration based upon
the Holder's investment representations. In this regard, the Holder hereby
represents and warrants to the Maker, that: (a) in the event the Holder avails
itself of the conversion feature of this Note, the Holder will acquire the
Convertible Shares or New Convertible Shares for investment purposes and without
a view to the transfer or resale thereof; (b) in the event the Holder avails
itself of the conversion feature of this Note, the Holder will hold the
Convertible Shares or New Convertible Shares for one year or as otherwise
required by law; (c) any sale of the Convertible Shares or New Convertible
Shares will be accomplished only in accordance with the Act and the rules and
regulations of the Securities and Exchange Act adopted thereunder; (d) as a
condition precedent to any conversion hereunder, the Holder will deliver to the
Maker a duly executed standard form of investment letter; and (e) the Holder
hereby consents to the continuance or issuance by the Maker of a stop transfer
order against any and all certificates representing the Convertible Shares or
New Convertible Shares on the books and records of the Maker and/or its transfer
agent; and consents to the Maker placing an investment legend on any and all
certificates representing the Convertible Shares or New Convertible Shares.
5. ADJUSTMENT OF CONVERSION RATE. The conversion rate provided herein
shall be subject to adjustment from time to time only as follows: If, as a
result of a reorganization, recapitalization or stock split, the outstanding
shares of common stock of the Maker are increased or decreased, or changed into
or exchanged for a different number or kind of shares of stock or securities of
the Maker, or of another corporation, or changed into or exchanged for cash, or
if all or substantially all of the Maker's properties and assets are distributed
to the holders of the Maker's common stock, or if there is a distribution upon
the shares of the Maker's common stock, by way of a spin-off of any shares of
capital stock or other securities of any subsidiary or other corporation or
entity, then, upon any conversion hereof after the record date for determination
of the holders of the shares of the Maker's common stock entitled to participate
in any such event, the Holder hereof shall be entitled to receive such kind and
number of shares of stock or securities or other property or cash as he would
have been entitled to receive had he owned the Convertible Shares or New
Convertible Shares issuable upon conversion at the time of that record date. If
the event involves another corporation or another entity, then the Maker shall,
as part of the transaction, make adequate provision for the holder hereof
thereafter to receive the
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securities, property or cash to which he is entitled under this Section.
Notwithstanding the foregoing, the conversion rate shall not be adjusted by
virtue of the Reorganization.
6. WAIVER OF PRESENTMENT, ETC. The Maker of this Note hereby waives
presentment for payment, demand, notice of non-payment and dishonor, protest and
notice of protest; and waives trial by jury in any action or proceeding arising
on, out of, under or by reason of this Note.
The rights and remedies of the Holder hereof under this Note shall be
deemed cumulative, and the exercise of any right or remedy shall not be regarded
as barring any other remedy or remedies. The institution of any action to
recovery any portion of the indebtedness evidenced by this Note shall not be
deemed a waiver of any other right of the Holder hereof.
7. STATUS OF REGISTERED HOLDER. The Maker may treat the registered
holder of this Note as the absolute owner of this Note for the purpose of making
payments of interest and for all other purposes and shall not be affected by any
notice to the contrary.
8. NOTICES. Any notice required or contemplated by this Note shall be
deemed sufficiently given if sent by registered or certified mail or via
overnight courier to the Maker at its principal office or to the Holder at the
Holder's address shown on the books of the Maker or at such other address as the
Holder may delegate in a notice for that purpose and shall be deemed to have
been sent on the date of mailing or the airbill.
9. HEADINGS. The headings in this Note are solely for convenience of
reference and shall not affect its interpretation.
10. ASSIGNMENTS. This Note is binding upon and shall inure to the
benefit of the Maker and the Holder and their respective successors. Neither the
Maker nor the Holder shall assign or transfer any rights or obligations
hereunder, except that the Maker may, with the express prior written consent of
the Holder, assign or transfer this Note to a successor corporation in the event
of a merger, consolidation or transfer or sale of all or substantially all of
the assets of the Maker (other than the Reorganization as defined in the Bridge
Agreement), provided that no such further assignment shall relieve the Maker
from liability for the obligations assumed by it hereunder.
11. LAWS OF THE STATE OF NEW JERSEY. This Note shall be deemed to be
made, executed and delivered in, governed by and interpreted under and construed
in all respects in accordance with the laws of the State of New Jersey,
irrespective of the place of domicile or residence of any Holder. In the event
of a controversy arising out of the interpretation, construction, performance or
breach of this Agreement, the Maker and the Holder hereby agree and consent to
the jurisdiction and venue of the Superior Court of the State of New Jersey,
Morris County and/or the United States District Court for the District of New
Jersey; and further agree and consent that l service or process by mail or
overnight package delivery service in any such action or proceeding outside of
the State of New Jersey and Morris County shall be tantamount to service in
person within the State of New
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Jersey and Morris County and shall confer personal jurisdiction and venue upon
either of the said courts.
The acceptance of any installments or payments by the Holder hereof
after the due date herein, or the waiver of any other or subsequent breach or
default shall not prevent the Holder hereof from immediately pursuing any or all
of his remedies.
PetPlanet.com, Inc
By: /s/ STEVEN E. MARDER
------------------------------------
Steven E. Marder, President
ACCEPTED:
Techscience Industries, Inc.
By: /s/ JAMES T. WOLL
------------------------------------
James T. Woll, President
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<PAGE>
NOTICE OF CONVERSION
(To be signed only upon conversion of the Note.)
To: PetPlanet.com, Inc. or Techscience Industries, Inc.
The undersigned, the holder of this Note, hereby irrevocably elects to
exercise the conversion rights represented by this Note for, and to acquire
thereunder, pursuant to and in accordance with the terms of this Note, an
aggregate of ___________ shares of Common Stock, no par value per share (the
"PPI Shares") of PetPlanet.com, Inc. ("PPI") or an aggregate of ___________
shares of Common Stock, $.01 par value per share (the "TSCI Shares") of
Techscience Industries, Inc. ("TSCI") at a conversion price of $.50 per PPI or
TSCI Share, and requests that the certificate(s) for such PPI or TSCI Shares be
issued in the name of and be delivered to the undersigned at the address
appearing on the books and records of PPI or TSCI, and if such PPI or TSCI
Shares shall not be all of the PPI or TSCI Shares converted thereunder, that a
new Note of like tenor for the balance of the unpaid and unconverted principal
amount due hereunder be delivered to the undersigned.
Dated:________________________ ________________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the Note)
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EXHIBIT 10 (J) STATUTORY NOTICE
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TECHSCIENCE INDUSTRIES, INC.
3 Rockaway Place
Parsippany, New Jersey 07054
NOTICE OF CONSENT TO ACTION BY MAJORITY SHAREHOLDERS
February 19,1999
On February 15,1999, the holders of 6,771,250 shares of Common Stock, $.001 par
value per share, of Techscience Industries, Inc. (the "Corporation"), out of
10,000,000 shares issued and outstanding and entitled to vote, representing a
majority of all shares outstanding adopted the following resolutions by consent
pursuant to Section 228(a) and 228(c) of the General Corporation Law of the
State of Delaware, and in accordance with the requirements of the Corporation's
Certificate of Incorporation and By-Laws:
RESOLVED, that the Board of Directors of the Corporation be, and the
same hereby is authorized, empowered and directed in the name and on behalf of
the Corporation and under its corporate seal and otherwise, and without further
vote or action by the stockholders of the Corporation, to take any and all such
action as such directors, in the exercise of their considered business
judgement, deem reasonable and necessary to negotiate and consummate a multi
faceted business combination with PetPlanet.com, Inc., a non-affiliated
California corporation ("Pet") and encompassing: (a) an amendment to the
Corporation's Certificate of Incorporation to effectuate: (i) an increase in the
number of shares of common stock, $.01 par value per share (the "Shares"), which
the Corporation is authorized to issue from 10,000,000 to 20,000,000 (the
"Increase"); (ii) a four for twenty-five reverse split of all issued and
outstanding Shares (the "Reverse Split"); (iii) the creation of an authorized
class of 2,000,000 shares of Preferred Stock, $.01 par value per share (the
"Preferred Stock") and the granting to the Corporation's Board of Directors the
authority, without further action by the stockholders of the Corporation to
provide for the issuance of the shares of Preferred Stock in series, to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the shares
of each such series and the qualifications, limitations or restrictions thereof;
and (iv) a change of the name of the Corporation to PetPlanet.com, Inc. (the
"Name Change"); (b) a private placement under Rule 506 of Regulation D under the
Securities Act of 1933, as amended (the "Act") of an aggregate of 400,000 post
Reverse Split Shares at $.062 per Share, which Shares shall be restricted for 30
months(the "Seed Money Private Offering"); (c) a private placement under Rule
506 of Regulation D under the Act of an aggregate of 250,000 post Reverse Split
Shares at $4.00 per Share, which Shares shall be restricted for 12 months (the
"Private Offering"); (d) an amendment to the Corporation's 1984 Incentive Stock
Option Plan creating the 1999 Long Term Incentive Plan (the "1999 Plan") wherein
an aggregate of 2,000,000 Post Reverse Split Shares are reserved for issuance of
option under the 1999 Plan; and (e) the acquisition of all of the issued and
outstanding shares of Pet's common stock, $.01 par
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value per share, solely in exchange for the issuance of an aggregate of
7,325,000 post Reverse Split Shares (the "Reorganization"). The Increase, the
Reverse Split, the Preferred Stock, the Name Change, the Seed Money Private
Offering, the Private Offering, the 1999 Plan and the Reorganization are
hereinafter collectively referred to as the "Business Combination". As of the
closing date of the Business Combination, the Corporation shall have an
authorized capitalization of 20,000,000 Shares and 2,000,000 shares of Preferred
Stock of which 9,575,000 Shares and no shares of Preferred Stock shall be issued
and outstanding; and it was
FURTHER RESOLVED, that the Certificate of Incorporation of this Corporation be
amended to effectuate the following changes:
1. To amend Article Fourth thereof, so that the said Article shall be
and read as follows:
"FOURTH: The aggregate number of shares which the Corporation shall
have authority to issue is Twenty Million (20,000,000) shares of Common Stock
all of which are of the same class and which have a par value of $.01 per share;
and Two Million (2,000,000) shares of Preferred Stock, $.01 par value per
share;"
2. To add a new Article Fifth thereof, so that the said Article shall
be and read as follows:
"FIFTH: The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of Article Fourth, to provide for the
issuance of the shares of Preferred Stock in series, and by filing a certificate
pursuant to the applicable law of the State of Delaware, to establish from time
to time the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof. The authority of
the Board with respect to each series shall include, but not be limited to,
determination of the following: (a) The number of shares constituting that
series and the distinctive designation of that series; (b) The dividend rate on
the shares of that series, whether dividends shall be cumulative, and, if so,
from which date or dates, and the relative rights of priority, if any, of
payment of dividends on shares of that series; (c) Whether that series shall
have voting rights, in addition to the voting rights provided by law, and, if
so, the terms of such voting rights; (d) Whether that series shall have
conversion privileges, and, if so, the terms and conditions of such conversion,
including provision for adjustment of the conversion rate in such events as the
Board of Directors shall determine; (e) Whether or not the shares of that series
shall be redeemable, and, if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall be redeemable, and
the amount per share payable in case of redemption, which terms, conditions,
amounts and dates may vary from time to time; (f) Whether that series shall have
a sinking fund for the redemption or purchase of shares of that series, and, if
so, the terms and amount of such sinking fund; (g) The rights of the shares of
that series in the event of voluntary or involuntary liquidation, dissolution or
winding up of the corporation, and the
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relative rights of priority, if any, of payment of shares of that series; and
(h) Any other relative rights, preferences and limitations of that series."
3. To add a new Article "Sixth" thereof so that the said Article shall be and
read as follows:
"SIXTH: The Board of Directors of the Corporation shall have the right
without the further vote of the Corporation's stockholders and without further
notice thereto, to consummate a reverse split on up to a four for twenty-five
basis, of all issued and outstanding shares of the Corporation's Common Stock,
$.01 par value per share, held by stockholders on the date the Board of
Directors declares such reverse split to be effective thereby decreasing the
number of issued and outstanding shares accordingly, and that, in the event
fractional shares result therefrom, the holders thereof not be paid any sum in
cash but in lieu thereof the Corporation shall round out the number of shares
issued to the nearest higher whole share."; and it was
FURTHER RESOLVED, that James T. Woll, Gary W. Gill and James S. Gallo be and the
same hereby are duly nominated and elected as directors of the Corporation to
serve until the closing of the Business Combination or until their respective
successors shall have been elected; and it was
FURTHER RESOLVED, that James T. Woll be and he hereby is duly nominated and
elected as President and Chief Executive Officer of the Corporation to serve
until the closing of the Business Combination or until his respective successor
shall have been elected and Gary W. Gill; be and he hereby is duly nominated and
elected as Treasurer and Chief Financial Officer of the Corporation to serve
until the closing of the Business Combination or until his respective successor
shall have been elected; and it was
FURTHER RESOLVED, that Wiss & Co. be and the same hereby is selected as
independent certified public accountants to examine and audit the financial
statements of the Corporation for the two fiscal years ended October 31, 1998;
and it was
FURTHER RESOLVED, that the acts and actions of management since the last annual
meeting of the Board of Directors of the Corporation be, and the same hereby are
ratified, confirmed and adopted as being in the best interests of the
Corporation and its stockholders; and it was
FURTHER RESOLVED, that the proper officers of the Corporation be, and they
hereby are, authorized, empowered and directed, in the name and on behalf of the
Corporation and under its corporate seal and otherwise, and without further vote
or action by the stockholders of the Corporation, and in any such manner as such
officers shall deem reasonable and prudent and in the best interests of the
Corporation and its stockholders to execute such documents as are reasonably
deemed necessary to implement the Business Combination and to give effect to the
transactions addressed by this Shareholder Consent.
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By virtue of the foregoing and following the mailing to all non-consenting
shareholders of the Corporation of a written notice summarizing the action taken
by this consent, the Corporation will file a Certificate of Amendment to the
certificate of Incorporation of the Corporation with the State of Delaware
implementing the Reverse Split and change of name and thereafter consummating
the Business Combination.
The Business Combination is being effectuated in order to facilitate the
development and expansion of the Corporation's core business activities as well
as to offer the Corporation's stockholders the opportunity to participate in any
trading market that may develop in the common stock of Pet.
By virtue of the foregoing, and following the mailing of this notice, the
Corporation will file a Certificate of Amendment to the Certificate of
Incorporation of the Corporation with the State of Delaware implementing the
Reverse Split and change of name and will thereafter proceed with the
implementation of the Business Combination. The implementation of the Reverse
Split will be conducted by Corporation by means of the correspondence
accompanying this Notice.
BY ORDER OF THE BOARD OF DIRECTORS,
Techscience Industries, Inc.
By: /s/ JAMES T. WOLL
----------------------------------------
James T. Woll, President
94
EXHIBIT 10 (K) CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION
95
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
TECHSCIENCE INDUSTRIES, INC.
Adopted in accordance with the provisions of Sections 228 and 242 of the General
Corporation Law of the State of Delaware.
Techscience Industries, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, does hereby
certify:
FIRST: The name of the corporation (hereinafter called the "Corporation") is
Techscience Industries, Inc.
SECOND: To amend Article Fourth thereof, so that the said Article shall be and
read as follows:
"FOURTH: The aggregate number of shares which the
Corporation shall have authority to issue is Twenty
Million (20,000,000) shares of Common Stock all of
which are of the same class and which have a par
value of $.01 per share; and Two Million
(2,000,000) shares of Preferred Stock, and which
have a par value of $.01 par value per share;"
THIRD: To add a new Article Fifth thereof, so that the said Article shall be and
read as follows:
"FIFTH: The Board of Directors is authorized,
subject to limitations prescribed by law and the
provisions of Article Fourth, to provide for the
issuance of the shares of Preferred Stock in
series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to
establish from time to time the number of shares to
be included in each such series, and to fix the
designation, powers, preferences and rights of the
shares of each such series and the qualifications,
limitations or restrictions thereof. The authority
of the Board with respect to each series shall
include, but not be limited to, determination of
the following: (a) The number of shares
constituting that series and the distinctive
designation of that series; (b) The dividend rate
on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or
dates, and the relative rights of priority, if any,
of payment of dividends on shares of that series;
(c) Whether
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that series shall have voting rights, in addition
to the voting rights provided by law, and, if so,
the terms of such voting rights; (d) Whether that
series shall have conversion privileges, and, if
so, the terms and conditions of such conversion,
including provision for adjustment of the
conversion rate in such events as the Board of
Directors shall determine; (e) Whether or not the
shares of that series shall be redeemable, and, if
so, the terms and conditions of such redemption,
including the date or dates upon or after which
they shall be redeemable, and the amount per share
payable in case of redemption, which terms,
conditions, amounts and dates may vary from time to
time; (f) Whether that series shall have a sinking
fund for the redemption or purchase of shares of
that series, and, if so, the terms and amount of
such sinking fund; (g) The rights of the shares of
that series in the event of voluntary or
involuntary liquidation, dissolution or winding up
of the corporation, and the relative rights of
priority, if any, of payment of shares of that
series; and (h) Any other relative rights,
preferences and limitations of that series."
FOURTH: To add a new Article "Sixth" thereof so that the said Article shall be
and read as follows:
"SIXTH: The Board of Directors of the Corporation
shall have the right without the further vote of
the Corporation's stockholders and without further
notice thereto, to consummate a reverse split on up
to a four for twenty-five basis, of all issued and
outstanding shares of the Corporation's Common
Stock, $.01 par value per share, held by
stockholders on the date the Board of Directors
declares such reverse split to be effective thereby
decreasing the number of issued and outstanding
shares accordingly, and that, in the event
fractional shares result therefrom, the holders
thereof not be paid any sum in cash but in lieu
thereof the Corporation shall round out the number
of shares issued to the nearest higher whole
share."
FIFTH: The amendment of the Certificate of Incorporation herein certified has
been duly adopted in accordance with the provisions of Section 228 of the
General Corporation Law of the State of Delaware by written consent of the
holders of a majority of the stock entitled to vote, in lieu of a meeting.
IN WITNESS WHEREOF, said Techscience Industries, Inc. has caused its corporate
seal to be hereunto affixed and this Certificate to be executed this 18th day of
March, 1999.
Techscience Industries, Inc.
By: /s/ JAMES T. WOLL
-------------------------------------------
James T. Woll, President
97
